Why Scots spirits firm has an eye on Vietnam and new Scotch releases

Scotch Malt Whisky Society owner Artisanal Spirits Company is eyeing further international expansion with the likes of Vietnam and Nigeria on the radar after cheering a “creditable” half-year outturn.

Chief executive Andrew Dane said the Edinburgh-based group, which listed on the London Stock Exchange in 2021, was in “active discussions” regarding a push into new markets as it looks to further grow membership. Other priorities for the remainder of the year include new malt whisky distillery releases and a “refresh” of the firm’s range “to ensure it continues to reflect current consumer trends”.

Revenues for the first half to the end of June were largely flat at £10.1 million while losses before tax narrowed to £3.1m, from £3.5m a year earlier. Net debt has now peaked and the group is likely to break even at the pre-tax level over the next couple of years.

Artisanal Spirits Company is the owner of the Scotch Malt Whisky Society (SMWS). Picture by Peter Sandground

Dane reiterated comments made in July when the group reached a “turning point” after the value of its cask spirit stock pushed through £100m. Artisanal Spirits now holds more than 18,000 casks from some 150 distilleries.

“We have delivered a creditable performance and made good progress on our journey towards profitability despite challenging trading conditions prevailing in some markets,” noted Dane. “We continue to focus on attracting and retaining higher quality members, whilst maintaining a well-controlled cost base.

“Our proven strategy of investing in whisky stock has built an impressive inventory to satisfy our requirements well into the next decade, as well as delivering a significant uplift in value creation, with the current cask value of just over £100m. Correspondingly, the group now only needs to acquire stock on a replenishment basis, thereby significantly improving the future cash profile of the business.”

In a “buy” note, analysts at Panmure Liberum pointed to a “commendable outturn in a tough trading environment”. They said the group’s valuation remained attractive and “underpinned by a substantial inventory base”.

Artisanal Spirits said it remained on track to meet a consensus forecast for full-year underlying earnings, or Ebitda (earnings before interest, taxes, depreciation and amortisation).

Scotch Malt Whisky Society owner the Artisanal Spirits Company widens full-year losses but toasts optimistic outlook