Scotch Malt Whisky Society has spent £5 million in new stock

It was the third deal completed by HotHouse in the last 18 months, following its investments in sizeable stakes in Chapel Down, the English wine brand, and Good Hemp, an alternative to milk made from hemp seed.

HotHouse now holds 70 per cent of the equity in the SMWS, which has premises in Edinburgh’s Queen Street, Leith and London, with its management holding 30 per cent.

Mr Thomson, who led the Noble Group merchant bank between 1997 and 2007, believes there is a big opportunity to develop the Society and expand its product range, suggesting it had not been prioritised by its previous owner as it focused on building the Glenmorangie brand.

“This was a slightly uncherished brand,” said Mr Thomson. “There are 25,000 members [of the SMWS] who are all whisky enthusiasts. We just thought we could really grow it and build it and help the brand to develop.

“Given John’s and my background, and other investors in the HotHouse Club, we felt we could both expand the product range."

HotHouse specialises in “internationalising” and “commercialising” food and drink brands, with Mr Thomson noting there are many great Scottish brands which are not realising their full potential.

He is confident that the expertise brought to the SMWS by the HotHouse leaders and its investors can help the Society expand its product range and grow membership.

At present 15,000 of its members are based in the UK while 10,000 are abroad, having joined through franchise operations.

In return for a £70 membership, SMWS members received a “starter pack” of three bottles of whisky. Membership gives them the right to buy rare bottlings of single malt Scotch whisky at the MSWS premises, with the latest additions to the range communicated each month.

Those whiskies are rated by an independent tasting profile.

Membership includes a magazine and access to its premises in Edinburgh and London, which offer a range of tastings rooms. Those facilities can be hired to allow members to entertain guests. Parts of the Queen Street premises in Edinburgh have recently been open to the general public, who can now dine in the building.

“What we are offering is not just access to single malts, but access to individual casks,” Mr Thomson said. “You only get 250 bottles out of a cask, so each bottling is unique.

“For those people who love whisky this is an ability to get something that is undiluted from the cask to the mouth, which is a different experience."

Mr Thomson added: “In today’s market, most things are standardised. If you are buying a single malt it will have been blended from lots of casks to give it a standard taste.

“It will be watered down to about 40 per cent (alcohol by volume) and chill-filtered to all the proteins will be taken out of it, and it will be coloured so that it is a standard colour.

“So what you are getting is a product that will taste today as it will [have] a year ago as it will taste in a year’s time, whereas the SMWS celebrates the fact you are getting something that’s direct from a cask that is unadulterated in that way, of which there are only 250 bottles. It is almost like a limited edition print.”

Mr Thomson did not say how much the HotHouse had invested to acquire its majority stake in the SMWS, but revealed it had invested £5 million in whisky stock since the acquisition. That means six years of supplies are now in place.

He also highlighted the strong board it has put in place, which includes former Glenmorangie chief executive Paul Skipworth as chairman, and ex-Scotch Whisky Association boss Gavin Hewitt.

Paul Miles has remained as managing director of the Society through the ownership change.

“They (the board) think it is a great product and that there is a huge opportunity to develop the SMWS,” Mr Thomson said.

Future developments could see the Society move into “artisanal spirits” beyond whisky, Mr Thomson added.