Investors toast maiden results of The Artisanal Spirits Company

The Edinburgh-based company, which floated on the stock market in June, reported a 20 per cent hike in turnover to £7.9 million for the six months ended June 30.

Managing director David Ridley told The Herald the results were underpinned by a strong international performance, propelled by e-commerce sales. “I am really happy and pleased to be presenting results that were ahead of expectation,” he said. “It’s really been a strong contribution globally to achieve that number, [with] in particular very strong e-commerce results driving that.”

International sales grew by 24% to £5.7m over the period, supported by faster rates of growth in the key export markets of the US and China. In the UK, revenue increased by 12% to £2.3m.

The company noted yesterday that its performance in the US, its “strongest territory” in the first half, was boosted by the five-year suspension of tariffs on single malt Scotch whisky in March.

Mr Ridley said the tariff had been built into its pricing in the US market for the full year, meaning its suspension immediately benefited the company’s results.

“It is very much a bottom line improvement for us while we focus on sustaining growth in the US,” he said.

First-half losses widened to £1.1m from £700,000 at the same stage last year, which the company said reflected investment in people and systems, and costs related to its initial public offering.

The timing of the easing of coronavirus restrictions meant the results benefited from just six weeks of sales in the society’s four venues, which are based in Leith, Edinburgh, Glasgow, and London. Mr Ridley expects there to be a stronger contribution from the venues as they are utilised more, but said sales would continue to be driven by the e-commerce operation.

Shares in Artisanal were admitted to the Alternative Investment Market in June in a flotation that valued it at nearly £78m.The float raised £26m from retail and institutional investors, with £15m generated for the company and £11m for shareholders who sold down stakes. At the time, Artisanal said it planned to use the bulk of the proceeds to invest in whisky and casks to broaden its range for members. It invested £1m in stock following the float, and has made a similar investment in whisky since the period-end.

Investment is also being planned to “streamline” the supply chain, and yesterday the company revealed it had secured heads of terms on the 10-year lease of a new logistics facility in west central Scotland.

The company is aiming to reduce its reliance on third-part providers of services such as dispatch, cask storage and bottling to take more “direct control” of supply-chain operations.

Finance director Andrew Dane acknowledged that demand remains high for logistics warehouses following the surge in e-commerce activity during the pandemic, and said Artisanal had been fortunate the find a space that met all of its requirements.

The company said Brexit continues to bring hurdles with regard to selling into Europe. Mr Ridley said the challenge has moved from “confusion” over paperwork to dealing with a dearth of hauliers, but noted Artisanal had been able to “get faster” with the new processes.

“Germany is now quite a good, fast turnaround, but it is still not as fast as we would like it to be,” he said. “It certainly wasn’t like this last year, when there were no delays from a customs clearance point of view. There is more physical handling with Brexit where we need to land product in a regional distribution centre to then be sent out to members.

“There are extra steps in the process, but they are getting better understood.”

He added: “For us, it is extra time and cost to get product to our members. That is something we have got to accept as a consequence of Brexit, but our main focus is to get as smooth a process as possible so that we can get whisky into the hands of our members at an appropriate time.”

Meanwhile, Artisanal said it has received the first orders for its new JG Thomson blended malt whisky brand from wholesalers and direct-to-consumer e-commerce websites. Ten thousands bottles of the new whisky, which is based on malts from all over Scotland, have now been produced.

A launch campaign for the range, which is expected to be sold in whisky bars and the retail trade, is due to launch “imminently”.

Membership numbers of the Society had grown to 29,400 by the end of August, when the value of whisky stock it held stood at £349m.

On the outlook, Mr Dane said Artisanal was “comfortable” with the forecasts in a research paper published yesterday by Equity Development. It is forecasting full-year revenue of £17.5m, up from £15m.

Shares closed up 3.3%, or 2.7p, at 83.7p.