Comment: The whisky society maturing like a good Scotch

In 1983, Pip Hills and a group of friends established The Scotch Malt Whisky Society (SMWS) in Edinburgh with a vision of sharing single cask single malt whisky with other whisky fans. This move came at a time of distillery closures and downturn in production, when single malt whisky was rarely available in pubs and not well known as a drink of choice.

'We are investing significantly for the future  we are seeing increasing numbers of members joining which supported sales growth of over 25 per cent in 2017,' says David Ridley, managing director of the Artisanal Spirits Company. Picture: Contributed

Fast forward 35 years, and times could not be better for single malt Scotch whisky, and the society, with new distillery openings, thriving global sales, and word of the delights of single malt having spread to tens of thousands of people worldwide.

Under the ownership of the Artisanal Spirits Company since 2015, having previously been owned by The Glenmorangie Company (part of the LVMH Group), the society is bringing renewed passion and commitment for the nation’s number one export. The Artisanal Spirits Company now has its eyes on the next 35 years of the society with substantial investment in stock, staffing, systems, international expansion and property.

“On the basis that Rome was not built in a day, we are investing systematically across different areas of the society, strengthening it as an independent business from LVMH,” says David Ridley, managing director of the Artisanal Spirits Company.

The SMWS, a members club specialising in bottling single cask whisky, invested across its UK and overseas operations as part of a long-term strategy to develop its proposition for its members.

It invested in establishing subsidiary branches in Japan and China, the latter a new market for the society; recruiting ten new staff members to manage its expanding business, a move contributing towards administrative costs rising by £1.2 million; and buying the ground floor of The Vaults in Leith, which has been the home of the society since its foundation. The space is now the office for the society’s team, but offers potential for future development to enhance the membership offering.

The SMWS also invested £4.7m in new stocks of whisky casks. It now holds cask stocks worth £12.3m, allowing it to provide an enhanced variety of whisky to its members around the world.

The society’s approach and performance is backed by its investors, such as Inverleith LLP, and its bankers. This is reflected in an equity raise of £4.2m in 2018, to fund cask buying and the introduction of a new business systems platform, which will be live in 2019. Bankers at RBS also increased its asset-based lending facility from £1.8m to £5.7m to fund cask buying.

Asked about the loss made in 2017, David Ridley said: “We are investing significantly for the future – we are seeing increasing numbers of members joining which supported sales growth of over 25 per cent in 2017. The investment forms part of our long-term approach, backed by our shareholders and bankers, towards strengthening the SMWS and its future. Some investment must come ahead of its return, that’s to be expected. From investing in new subsidiaries in Japan and China, to building up our stocks of whisky casks, we are focused on delivering the best whiskies and membership experiences for our members, wherever they are around the world.”

The past year has seen the SMWS develop its authority, leadership and expertise within the industry. 2017 was a year of unprecedented awards success for SMWS whiskies, with significant wins at the International Wine & Spirit Competition, the Scotch Whisky Masters and the San Francisco World Spirits Competition.

A long-standing member of the Scotch Whisky Association, the SMWS recently became a member of the Scotch Whisky Research Institute, as it continues to play an active role in the industry. This move is part of a commitment to quality and the development of knowledge and skills to source, produce and supply the best examples of Scotch whisky for its members.