SCOTCH whisky firm Speyside Distillers has revealed plans to ramp up production and expand sales in the Far East after clinching a deal with a massive Chinese drinks company.
The firm will increase output from its distillery at the foot of the Cairngorms, near Kingussie, from 600,000 litres to one million litres per year – equal to around 1.3 million 75cl bottles – to cope with demand spurred by the partnership with Luzhou Laojiao International Development (HK) Co.
The deal will pave the way for the distiller’s SPEY and Beinn Dubh brands to be sold in retail stores across the length and breadth of China.
And it will lead to the full Speyside portfolio, which also includes Byron’s Gin, being distributed in Luzhou Laojiao’s duty free outlets in China, as well as travel retail stores in the US and other key global markets.
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The tie-up with Luzhou Laojiao is a major coup for the boutique distiller, which will aim to tap into the growing demand for luxury Scotch whisky among China’s vast and increasingly urban middle class population. Major distillers such as Diageo and Pernod Ricard have seen sales of high-end Scotch whisky return to growth in China in recent months following several years of decline sparked by government-led anti-extravagance measures.
Speyside Distillers forecasts that the reach of Luzhou Laojiao, which as well as being a distributor is a top-three producer of Baijiu Chinese white spirt, will help it lift turnover from the current £16 million to more than £20 million in the next two years. And if demand grows as expected, it will take steps to increase output at the distillery further to around two million litres per year.
Chief executive John McDonough, who acquired the Speyside distillery six years ago, said the company came to the attention of Luzhou Laojiao thanks to its presence in Taiwan, where its brands are among the best-selling single malt Scotch whiskies. More recently it has moved into China.
Mr McDonough, whose ancestors built the Bruichladdich distillery on Islay in 1881, said: “The Chinese consumer is now starting to appreciate and buy single malt.
“That has been expressed by a number of visitors coming to Scotland, trade customers not just coming to see us but other Scotch whisky companies. It is very good for the industry, but it is fantastic for us. It is a really big thing for us.”
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Asked to sum up the reach of the firm’s new distribution partner in the Far East, he said: “Luzhou Laojiao is one of the top three producers of Baijiu white spirit, the national drink in China, so they are huge, and have got a partial listing of the company in Shanghai and Hong Kong. We are delighted to be able to work with them, because what they give us immediately is solid distribution throughout the whole of China, which is fairly unusual.”
Speyside Distillers employs seven staff at its office Glasgow, 35 on the ground in Taiwan and seven in China, in addition to several staff at its Kingussie distillery. Two further staff could be taken on at the distillery as a result of the expansion.
The company also runs a retail shop in Aviemore, where three staff are employed.
Patricia Dillon, managing director of Speyside Distillers, said: “Our international reach has grown significantly in the past five years and our brands are now present in 34 different countries. Due to John’s existing business operations in Taiwan when he bought the distillery, we were very quickly able to cultivate a market for SPEY in that territory and it has historically always been a key driver for sales.
“Around 70% of our global sales currently come from that region, but this agreement with Luzhou Laojiao for global duty free and internally within China sets us on a path that will challenge the volume that we have in Taiwan. China is a market that we have watched very diligently for a number of years, but we needed the support of a major partner.”
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