Whisky-Wealth-Club-Scotch-brochure 2020 March - Flipbook - Page 8
Why distilleries need investors
The whisky maturation process is a costly one
with operating costs including insurance, employee
salaries, utility expenses, purchasing casks, buying
high quality grain and making the spirit itself.
250
200
In WhiskyStats’ monthly price
updates for bottled whisky, we
can see that all the regions have
trended upwards since 2013.
Scotch whisky is in a very stable
place, with market dominance
and a great secondary market.
150
100
2013-01
8
2014-01
2015-01
2016-01
2017-01
Campbeltown
Highlands
Islands
Islay
Lowlands
Speyside
2018-01
2019-01
There are two key strategies that distilleries commonly
adopt to accommodate this high upfront cost and remain
profitable during the whiskey maturation period:
Strategy One:
Borrowing
Strategy Two:
Wholesale selling
The traditional bank loan or
credit facility are amongst the
funding options distilleries
can consider to support
their business. However,
in addition to potentially
signing over assets as
security and interest rate
exposure, securing funds
can be a difficult and lengthy
process. Distilleries that
are currently leveraged
may struggle to increase
borrowing facilities and the
time taken to obtain funding
can pose a significant risk
to continuing business
operations. Similarly, taking
on investors into the distillery
itself would usually require
distilleries to relinquish
some control, which may
not be a viable option for
some business owners.
Distilleries are in the business of producing spirit.
To create an alternative source of funds, they
can produce new make spirit and sell the casks
at wholesale rates to a whisky bonder or broker.
This gives distilleries more control over the speed
and source of their funding. Some distilleries
use this model with a percentage of their whisky
production to ensure a consistent revenue
stream. This allows them to cover running costs
while the majority of their spirit is laid to rest to
mature and be bottled many years in the future.
Whiskey & Wealth Club
facilitates this process.
We have contracts with the distilleries to
purchase large quantities of this new make
spirit at an agreed, wholesale price. This sale
provides the distillery with the funding required
for operations or opportunities. The new make
spirit is taken straight off the stills to be matured
first fill, premium oak, ex-bourbon casks. It is
then stored in a bonded warehouse and the casks
are fully insured for five years against fire,theft,
accidental damage and spoilage, making our
offering a full turnkey investment.
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