An Islay distillery that employs 40 people will ramp up production and storage capacity thanks to a £22.5 million funding package.
Kilchoman Distillery has already started work on a new warehouse and extra staff have been hired to cope with work as it expects to increase the amount of whisky it produces by 40% within the next 12 months.
Set in 2,000 acres of farmland, Kilchoman is Islay’s only “farm distillery”, which means it produces whisky with its own barley.
Kilchoman is one of nine distilleries on Islay and was credited with kicking off a renaissance for the island when it became the first in 124 years to start producing whisky again when it launched in 2005.
The number of operational distilleries on Islay, which is renowned for producing distinctive, peaty flavoured Scotch, was just six at the start of the millennium. Today there are nine, with at least another three in the planning, including the revival of the “ghost” distillery at Port Ellen, which was mothballed in the 1980s.
The trend on Islay is reflected across Scotland as global demand for rare, single malt and “premium spirit” grows while stocks of aged product dwindles.
Premium spirits in demand
Between 2000 and 2012, six were opened. By 2018, another 24 were distilling and it is expected that at least another 20 will be producing spirit this year.
The independent Kilchoman business is family-owned, established by Anthony and Kathy Wills, and is now supported by their three sons, George, James and Peter who manage the distillery’s sales and marketing activities. Anthony remains hands-on as master distiller while Kathy is head of the visitor centre.
Barclays has agreed the funding package in order to further grow sales on a worldwide basis.
The brand is established in 50 countries, with the biggest markets being in China, France, Germany and the US. The backing from Barclays will allow Kilchoman to increase its presence in these “big four” markets, the bank said.
The process of “laying down” and storing whisky, normally for a minimum of three years due to legal requirements, requires substantial working capital while the spirit matures.
Whisky an expensive endeavour
Islay Heads, general manager at Kilchoman, said: “Filling thousands of barrels of whisky and waiting several years for the spirit to mature is an expensive business.
“There are exciting opportunities to grow our brand in countries like France and the US and despite the unsettling economic conditions there remains a growing market for premium whisky brands.”
Andy Hall, head of Barclays Corporate Banking, Central Scotland, added: “Despite the challenging economic conditions, the production of our national drink remains an expanding industry and we are pleased that Kilchoman is now one of several independent distilleries in Scotland where we are supporting their ambitions for growth in Scotland and beyond.
“Whisky remains a growing market and there is still a huge appetite for single malts, with many people still prepared to pay premium prices.”
Kilchoman Distillery reported turnover of around £7m at its last audited accounts to December 2020.
Islay nine
Islay’s nine working distilleries are Ardbeg, Ardnahoe, Bowmore, Bruichladdich, Bunnahabhain, Caol Ila, Kilchoman, Lagavulin and Laphroaig.
The first recorded distillery on Islay was Bowmore, founded in 1779, and the most recent addition was Ardnahoe, established in 2018.
