How one Scottish distillery is enjoying global success

Owning a 200-year-old distillery in Scotland was an exciting opportunity for Australian entrepreneur, David Prior, who acquired Bladnoch — the southernmost distillery in Scotland — in 2015. The distillery had been founded in 1817, staying in the same family for almost a century.

Fast-forward to today and the Bladnoch distillery operates in 65 markets, selling their Lowland single malt Scotch whisky, Bladnoch, and their blended Scotch whisky, Pure Scot. Not bad going in an industry where, as Bladnoch’s Head of Commercial, Will Pitchforth, says, there is a “wonderful slowness” to how things are done.

In June, the distillery released a 30-year old Bladnoch, and bottles are already on the way to countries including China, Taiwan, Korea, Germany, and France.

This expansion into so many markets sets Bladnoch apart somewhat from the average Scottish distillery. Perhaps it is partly due to the fact that the owner – and Will – are Australian, Will says. They have been recognised for their success, gaining the Queen’s Award for Enterprise for excellence in international trade.

“I think that a lot of distilleries in Scotland focus on the UK market first, and maybe they experience western Europe. Eventually they'll get to Asia, America. We've got a much more global viewpoint.

“We've seen opportunity in places as far-flung as Nigeria and Israel. We shipped to Argentina, Ecuador. These are markets which might not be top of a Scotch distillers’ hit list, but we've opened ourselves up and got very good at exporting,” says Will.

“It shows that the geography doesn't have to be a hindrance to growing a small brand.”

Selling into the first 10 countries was much harder than the next 10, and then the next 10, he points out.

Sometimes they develop into a market through word of mouth. For example, the owners of a Nigerian importer saw a bottle of Pure Scot on a shelf in Israel, and got in touch with the distillery. “We've started shipping some good volumes into Nigeria,” says Will. Other times, they actively search to select the right partner in a country, for example, in Spain, or China.

“We don't have a sales team of thousands, all around the world, we have to rely on a distributor. And so those third-party distributors essentially become the face of the brand and your company in those markets. So, we look for trusted partners that respect pricing and movement of goods across borders.”

While the US is one of their top three markets, challenges they have faced there include navigating the strict three-tier system.

If someone wants to buy a bottle of whisky in the USA, explains Will, “I have to sell it to an importer, who has to sell it to the state distributor, who has to sell it to a retailer, who can then sell it to you.” There are also unique labelling laws in the US to contend with.

Operating across so many markets has taught them a lot, and Will has advice to share with companies who want to expand geographically.

“Do your research and go deeper than the headlines,” he says.

“There are markets that seem, on the surface, particularly attractive. But once you really look at it, you realise that you'll be throwing good money after bad if you were to invest at that stage of growth.”

Meanwhile, other markets that might not spring to mind might prove to be very successful. For Bladnoch, Israel is a good example of this.

“Yes, there are safe, traditional markets, but don't be afraid to try new ones, because often it can be surprising just how profitable they can be.”

Will is really excited by opportunities in Africa, the Middle East, and South America. Yet the nerve centre in Scotland remains the place where visitors to the distillery get to witness the whole process of whisky being made – from the grain that arrives into the hopper on a Monday morning to the bottle being labelled, all by the team on site.

And behind the scenes, financing a whisky business is also an interesting process.

A distillery has a totally different profile to most businesses, with stock assets that appreciate in value.

“There's something to be said for when your inventory goes up in value every year,” says Will.
With this very particular business model, they appreciate the real interest that HSBC takes in the distillery. Will says that HSBC is “really on the journey” with them.

“They're very level-headed, and they're very appreciative of the long timescales that whisky works on.”

HSBC is providing Bladnoch with asset-based lending (ABL), which is based on the value of their stocks of whisky. In 2020, HSBC provided Bladnoch with £7 million in ABL, which has now increased to £13 million. The business has grown significantly over that time. This funding allows the business to grow their asset base, lay down more stock, add value, and sell worldwide.

“HSBC really believe in what we're doing, we've got a great team that we work with, they're very supportive, they've seen our rapid growth,” says Will.

“The great thing about whisky is that they have got security and safety of knowing that there's inventory there that goes up in value every year.”

And as they think 10, 20, or 30 years ahead with the whisky being made today at the distillery, this success looks long set to continue.