GlenWyvis distillery faces questions amid funding drive

He granted a 175 year lease for a rent of £1 per year, as well as the use of a water borehole to create the whisky but, as previously reported by The Herald, says the original ethos has been hijacked.

Now, with the distillery cutting future income projections, penalised for discharging effluent into a nearby burn, and paying £25,000 per year to lease a building it cannot use, Mr McKenzie says "the public need to know where their money is going".

In April, GlenWyvis launched a third share offer as part of a drive to raise an additional £2.75m by 2027.

The distillery plans to raise £2m by crowdfunding and the rest through bonds offered to existing members, with an initial crowdfunding goal of £500,000.

As of July 26 the Crowdfunder had raised £108,310.

Mr McKenzie told The Herald: "If you invest in it you're now a member and then you can go and buy these investment bonds.

"You can become a member of GlenWyvis for £250, then go and buy £100,000 worth of bonds and get a return and tax savings.

"That's not what it was about.

"They're asking the public for money and I can't stand by and watch  - the public needs to know where their money is going."

Read More:

• How things went sour at Scotland's first community-owned whisky distillery

• Scotch whisky distillery GlenWyvis seeks ‘voluntary directors’

• The fall of Locavore - when a social enterprise collapses

As reported by The Herald, a bitter dispute has emerged between the distillery's founder, commercial helicopter Mr McKenzie, and those who run the community project.

When the project was set up, the lease granted the distillery to use the renewable energy supply on the farm, provided there is 5,000Kwh per annum for the purposes of Mr McKenzie, and pay for the costs of importing further energy from the grid.

Mr McKenzie faced a bill of £19,953.64 and the prospect of electricity being cut off to both the distillery and his farm.

Asked by The Herald, GlenWyvis said they had only been informed of an outstanding balance on 21 March 2024, and "the amount of the balance and the supporting invoice were not provided until 28 March".

They added: "Mr McKenzie did not notify us of his cessation of payments. We discussed the matter with the electricity supplier directly and it transpires that the threatened disconnection was at Mr McKenzie's request.  We were not warned of any impending request for disconnection."

A legal letter, seen by The Herald, was sent by Aberdeen legal firm Lendingham Chalmers on behalf of Mr McKenzie on November 4, 2022.

It sets out that "the distillery was put on notice by letter dated 6 October 2022  that it is now necessary for the distillery to plan its own standalone connection to the grid/electricity supply" and asked GlenWyvis to confirm "it it would pay the increased electricity charges from November 2022 onwards".

GlenWyvis founder John McKenzie (Image: Supplied)

The letter states that a follow-up email with further information was sent on 11 October 2022, receiving no response, and six days later "our client put the distillery on notice that he may have no option but to discontinue the farm’s connection to the grid". Two further phone calls from Lendingham Chalmers received no response.

The letter states "our client is not prepared to pay for the distillery’s electricity usage... our client therefore intends to discontinue the farm’s electricity supply with EDF".

GlenWyvis did not respond to requests for comment.

Questions also surround the use of investors' money by GlenWyvis.

In February 2021 the distillery was granted planning permission to build a bonded warehouse at Inchberry for the purpose of storing its casks.

On April 1 of that year a building warrant was granted with a value of work listed at £58,921.

GlenWyvis had leased the building, an old farm steading, on a 10 year basis effective from March of 2021 for an initial £15,000 per year, rising to £20,000 the following year and £25,000 for each subsequent year after that.

Blaming increased costs, the distillery now concedes "converting Inchberry into a warehouse may now be too expensive", citing increased costs post-Covid. In its 2023 business plan it said it hoped to open the warehouse in 2023, and would proceed "as soon as funds are in place".

GlenWyvis will pay £25,000 per year for the lease until March 1, 2026 when a break can be enacted, provided notice has been given six months prior.

Chair David MacIntyre told shareholders at the 2024 AGM: "We have of course made representations to the owners to terminate those payments but there was no joy in that respect, unfortunately."

Inchberry is located 21 miles from Dingwall, the town the GlenWyvis project was set up to benefit.

Mr McKenzie, who has set up his own crowd funding to help with legal costs, said: "The community business I started is long gone - this was about developing Dingwall.

"How many directors on the board, at this minute, are from Dingwall? Not a single one.

"Fighting for Dingwall is what I started the whole thing for and it's been hijacked, and if wasn't for this money obsession it would still be Dingwall's.

"They'll say they give out grants to businesses in Dingwall but it's like scraps from the table. It's meant to be Dingwall's distillery, so giving a few quid when you're spending all this money on a warehouse outside Inverness... I've just had enough of it."

The distillery was also penalised £15,000 in 2023 for discharging effluent into Tulloch Burn, with a cease and desist letter from Lendingham Chalmers on behalf of Mr McKenzie sent to GlenWyvis regarding the issue on October 6, 2022.

GlenWyvis acknowledged: "an effluent discharge stream that should have been gone to the effluent tank was being discharged to ground – this resulted from a flaw in the original construction and/or operating regime".

In an agreement with SEPA, the sum is to be paid to "worthy local environmental causes" over the course of three years.

For the year to December 31 2023, GlenWyvis made a net profit of £4,962, with sales "significantly behind expectations" for the first nine months of the year. It has long-term liabilities of £1,121,593.

It spent £116,000 on legal fees in 2022 and 2023.

In its 2021 business plan, the distillery had forecast annual sales revenue of £2.5m by 2029 but has cut that to around £1m in the 2024 plan.

GlenWyvis has also substantially revised forecasts for revenue based on its GoodWill gin.

In its original prospectus, sales of the spirit were forecast to rise to £250,000 by 2029 but this has been revised to "under £30,000" thanks to "comparatively poor" margins and "over-optimistic volume projections".

In the financial targets section of its 2024 business plan, GlenWyvis attaches a 'high' risk level to the share and bond offer failing to attract sufficient funding with a 'moderate' risk to the distillery's going concern status.

In mitigation to the latter it states "the distillery’s CEO and Management Committee are aware of the signs and symptoms of operational and financial distress and have several tools at their disposal to respond", while shortfall in the former would aim to be met by "lease versus buy options, or... funds from grants, low-cost loans, or from commercial funders at higher rates of interest".