Scotch Malt Whisky Society owner ASC sets out new goals after cracking £100 million cask milestone

Scotch Malt Whisky Society owner Artisanal Spirits Company said it had reached a "turning point" after the value of its cask spirit stock pushed through £100 million.

The Edinburgh-based group, which listed on the London Stock Exchange in 2021, told investors that "historic levels" of investment in whisky stocks were no longer required as it transistions to purchasing on a replacement basis to satisfy future growth demands.

An independent valuation of the company’s Scotch cask spirit stock held at the end of June estimated the inventory to be £98.4m. Combined with about £3.5m book value of American, other world whiskies and other spirits, this represents a total cask spirit value of just over £100m, with net debt of £22.8m - as of the end of 2023 - representing only around a quarter of this total.

Artisanal Spirits Company is the owner of the Scotch Malt Whisky Society. | Peter Sandground

In a trading update to the stock exchange, the group confirmed that the “positive profit improvement momentum” which characterised the latter part of 2023 had continued through the first half of this year, with a £1m year on year increase in underlying earnings. It said its growing global footprint, with launches into new markets such as Taiwan, the acquisition of Single Cask Nation in January of this year and the development of its members’ cask sales programme, had enabled it to mitigate its exposure to any given market, such as China where trading “continues to be challenging”. With a “larger, more diversified business”, China is increasingly proportionately smaller for the group.

Group revenue was “broadly flat” in the first half, Scotch Malt Whisky Society membership was broadly stable and year on year costs were reduced, ASC added.

Chief executive Andrew Dane said: “ASC’s proven strategy of investing in whisky stock has built an impressive inventory which will satisfy our requirements well into the next decade, as well as delivering a significant uplift in value creation, and whilst we have an independent expert valuation estimate of just over £100m today for the casks, the business is focused on generating maximum value creation through maturing and bottling these premium whiskies which ultimately delivers a multiple on the cask value, with estimated future retail value in bottles of almost £500m.

“Furthermore, with our cask levels now reaching an optimal level, we have reached a turning point in the cash investment requirement in the business. Historic levels of investment in whisky stocks are no longer required as we transition to purchasing on a replacement basis to satisfy future growth demands, representing a very positive inflection point for the cash profile of the group.”

He noted that post-flotation, the group had continued to optimise its whisky cask purchasing by evolving to a greater acquisition of new make spirit - transitioning from historical acquisitions of more aged stock - building an “exceptional collection” of around 18,000 casks, from in the region of 150 distilleries and representing more than 200 different makes.

With a presence in some 30 countries, the Scotch Malt Whisky Society operates a direct-to-consumer model primarily through e-commerce, in addition to four member rooms in the UK.