Which type of distillery does best in a tough market?
Commercial Spirits Intelligence No.88
This newsletter is a collaboration between Duncan McFadzean of Noble & Co, and Martin Purvis. In this newsletter we leverage our experience, contacts and market intel to provide meaningful analysis that speaks to relevant issues for you.
Why scale makes sense for a distillery
We have noted before the trend to many of the new distilleries being smaller, producing ‘artisanal spirits’ or ‘craft whisky’. For many of those with a compelling brand narrative around this (see Arbikie or Nc’Nean for example) this makes a lot of sense. However, for many others the fact of being smaller means a higher cost of make. This week we look at the economics of a bottle of whisky and how the cost of make impacts on the margin, returns and cash a distiller makes. In the current difficult climate, this plays directly into who can win at selling bulk spirit at today’s prices. This week’s article builds on our insights from last week’s look at the banks and the market for asset backed loans.