Whisky: Making a dram-atic entry
Scotch whisky continues to be the indisputable star of the Scottish food and drink industry. Following a record breaking 2022 where exports reached £6.2 billion and accounted for 77 per cent of Scottish food and drink exports, the first half of 2023 continued the trend with an export value of more than £2.5bn.
Against that background, it is unsurprising that new investors want to enter the market and build their own distillery. They will face many of the same challenges as any other new business, including developing a business plan, securing funding and creating a strong brand.
Understandably, the distillery’s location is a key consideration. Location influences flavour profile, operational costs and market accessibility before even considering the implications for visitor experiences.
However, long before building work begins, prospective investors will have to deal with planning permission and construction requirements not only for the initial site, but also for any future expansion required for additional warehousing.
Entering the whisky sector opens doors to a world of tradition but also – less excitingly – to historic market standards and regulations. These include a distiller’s licence from HMRC which requires approval of the distillery’s plant and processes, ensuring public safety and quality production standards. Compliance with environmental laws on waste disposal, water usage and air quality is also required.
Scotch Whisky Regulations also require focus, as they dictate that the product must be made in Scotland using only cereals, water and yeast. Maturation in oak casks for at least three years is mandatory and bottling must be at no less than 40 per cent alcohol by volume (ABV). The liquid must also be distilled below 94.8 per cent ABV to preserve natural flavours and aromas, with no additional flavouring allowed.
Building a brand is essential, as is ensuring appropriate intellectual property protection. Key elements include registering brand names and logos as trademarks, and protecting unique processes as trade secrets.
These legal challenges will sit alongside other day-to-day matters, such as hiring staff, health and safety requirements, and contracts with suppliers and distributors.
Having worked with some of the world’s most renowned whisky brands and companies, Dentons in Scotland has a wealth of experience to offer new distilleries to make sure they have the information and help they need to succeed.
- Adam Knowles is a partner at law firm Dentons