ONE of Islay’s newest distillers has secured an investment deal worth more than £20 million to fund ambitious expansion plans.

Kilchoman Distillery, which began production in 2005, has agreed a £22.5m funding package from Barclays.The cash will be used to increase production capacity and grow the single malt's presence in its four biggest international markets: France, Germany, the US, and China.

Kilchoman, which grows its own barley on its 2,000-acre farm, aims to produce 40 per cent more within the next 12 months.

Work on a new warehouse has begun, and extra staff have been recruited, to handle increasing demand. The new investment will allow the distiller, a major employer on Islay with 40 people working for the company, to store thousands of more casks which they can bring to market in the future.

Islay Heads, general manager of Kilchoman, said: “Filling thousands of barrels of whisky and waiting several years for the spirit to mature is an expensive business. This substantial investment will allow us to invest back in the business, with construction of a new warehouse already underway and plans in the pipeline that should bring efficiencies and further expansion.

“There are exciting opportunities to grow our brand in countries like France and the US and despite the unsettling economic conditions there remains a growing market for premium whisky brands.

“It has been pleasing to deal with the team at Barclays who were informative about the whisky industry and genuinely interested in the business and our staff. For us it was all about getting the right package in place and developing a long-term relationship. Barclays listened to any points we made and came up with a deal not driven by ticking a box but meeting our needs for a straightforward credit facility to meet our ambitions.”

Kilchoman, one of nine distilleries on Islay, was established by Anthony and Kathy Wills in 2005, when its first cask was laid down. The Wills are now supported in the business by their three sons, George, James and Peter.

Andy Hall, head of corporate banking at Barclays for central Scotland, said: “Despite the challenging economic conditions, the production of our national drink remains an expanding industry and we are pleased that Kilchoman is now one of several independent distilleries in Scotland where we are supporting their ambitions for growth in Scotland and beyond.

“Whisky remains a growing market and there is still a huge appetite for single malts, with many people still prepared to pay premium prices.

“Our expertise in this area means that Barclays is ideally placed to offer a range of support to businesses in one of Scotland’s most important sectors. We have a breadth of knowledge and understanding of how varying levels of investment is key to supporting distilleries, where in most cases the whisky produced today will not be available for market for several years.”