Navigating the Early Years: How New Scotch Whisky Companies Generate Revenue

Scotch whisky, a beloved and premium spirit, requires a minimum of three years of maturation to legally label it as such. However, many brand new distilleries pursue various strategies to generate revenue and maintain their operations while their primary product is still maturing. In this article, we explore the methods these companies employ to earn money during the initial stages of their operations.

Distillery Tours and Gift Shops

One of the primary sources of income for new distilleries is the sale of tours and merchandise. A short tour of the facility provides visitors with an educational and engaging experience, while gift shops offer an array of branded souvenirs ranging from t-shirts and mugs to miniature bottles of the various spirits produced on-site. This approach not only boosts revenue but also helps to inculcate a sense of community among visitors.

Blended Whiskies and Branded Spirits

Another common strategy is the production and sale of blended whiskies. These whiskies are often made using other distilleries' base spirits, but with unique blends that set them apart. This allows new distilleries to create distinctive products without the long wait for their own single malts to mature. In some cases, these blended whiskies can be sold at a premium, as they still evoke the mystique and quality associated with Scotch whisky.

On-Site Gin and Vodka Distillation

Many new distilleries also produce gin and vodka on-site. Unlike whisky, which requires a lengthy maturation period, these spirits can be distilled quickly and sold immediately. The creation of gin, for example, involves infusing spirits with botanicals, providing a versatile and profitable product. These on-site spirits offer a more immediate return on investment and help to attract visitors to the distillery.

Subscription Clubs and Individual Barrel Sales

To further engage their audience, some distilleries offer subscription clubs. Members receive samples of the new spirit as it ages and access to a limited edition of their first bottling once it is ready. These clubs not only generate ongoing revenue but also build a loyal customer base. Additionally, some distilleries sell individual barrels, allowing customers to invest in their own piece of the maturing whisky. This strategy not only brings in one-time significant sales but also provides an emotional connection for the buyer, who will anxiously await the release of the whisky they helped to produce.

The Early Years of Successful New Whisky Distilleries

Successful new distilleries like Arran and Kilchoman have prioritized these strategies to stay afloat while their core product is maturing. They quickly introduce non-age statement (NAS) whiskies and lower-aged blends to generate immediate sales. This approach is furthered by pre-selling interesting whiskies before they are even placed in casks, capitalizing on the increasing trend towards Scotch whisky.

Market Dynamics and Consumer Trends

While blended whiskies, NAS whisky, and on-site spirits are common, the overall market for new Scotch whisky distilleries is highly dynamic. Many distilleries that were forced to close in the 1990s during the downturn have been revived, producing older and older whiskies. However, consumer preferences are shifting, and it is likely that in the coming years, there will be a renewed emphasis on younger, more approachable whiskies.

Conclusion

The early years of new Scotch whisky distilleries are essential for establishing the brand and building a loyal customer base. By diversifying their product offerings and engaging with their audience through various marketing strategies, these distilleries can generate revenue and lay the foundation for long-term success. As the market for Scotch whisky continues to evolve, the ability to adapt and innovate will be key to navigating this exciting and ever-expanding industry.