Loch Lomond Distillers has signalled plans to expand its historic Glen Scotia distillery in Campbeltown as the company posted a significant leap in profits during its most recent financial year.

The privately owned company reported a pre-tax profit of £12.4 million for an extended, 15-month period to December 31, 2023, amid challenging conditions in the export market for Scotch whisky. This compares with a pro-rated profit of £5.5m for 2022.

Chief executive Colin Matthews hailed the strength of the performance amid a challenging spell for the Scotch whisky industry, which has seen exports buffeted by volatile economic and geopolitical factors in recent months.

Those challenges were writ large by the Scotch Whisky Association as it published the latest export figures for the industry last week, which revealed the value of overseas shipments tumbled by 18% to £2.1 billion in the first half of the year. The figures revealed sharp falls in exports to key markets, including China, where economic growth has slowed.

Read more:

Loch Lomond hiked profits for the third year in a row as turnover surged by 16% to £148m, compared with pro-rated sales of £127m the year prior.

Mr Matthews said: “The 2023 results are a testament to the growing strength of our brands with whisky drinkers around the world and another momentous effort from the entire team. Whilst I am determined to continue to invest in our brands, our people and our infrastructure, there is no escaping the fact that global alcoholic beverage markets have become a lot tougher, with consumer spending under pressure (driven by higher rates of inflation and interest rates) coupled with supply chains de-stocking as the unpredictability that was a feature of the Covid pandemic has unwound. This started through the latter part of 2023 and has continued in 2024.

“I am confident that the qualities that we have built across the business and the tireless dedication of the Loch Lomond team will see us perform well both in the UK and internationally against this challenging backdrop this year. I hope that some of the better economic indicators that are being reported more recently mean that, as we move out of 2024 and into 2025, these headwinds might abate.”

The company owns the Loch Lomond and Glen Scotia distilleries, as well as Glen’s Vodka and High Commissioner blended Scotch whisky brands. Glen Scotia, which was founded in 1832, is one of just three remaining distilleries in the once-booming whisky region of Campbeltown, though there now plans to build new distilleries in the area.

Writing in new accounts, Loch Lomond said Glen Scotia has “continued its impressive journey of profitable growth and its mission to drive increased awareness and appreciation for the single malts from Campbeltown, the smallest and, for now, least well-known Scotch whisky region”.

Along with the Loch Lomond brand, the company said Glen Scotia continued to make an impact in “prestigious international awards” during the year, including being named best single cask in the world at the World Whisky Awards. The distillery also released the oldest Glen Scotia to date, at 49 years old – a dram curated especially for the Distillers One to One Whisky Auction. It was auctioned alongside an exclusive collection of Littlemill, Loch Lomond’s ultra-premium silent distillery.

Writing in the accounts, the company signalled its desire to capitalise on the growing popularity of Glen Scotia.

“The continued success of the Glen Scotia brand means that having continually increased production since acquiring the distillery in 2014, we are now exploring opportunities to invest further in the site and deliver a step change in capacity and capability in the near-term,” directors said. “As at 31 December 2023, £1.7m of costs relating to capacity expansion has been committed.”

Investment is also planned by the company for the Loch Lomond distillery in Alexandria and at its maturation sire in Hurlford, East Ayrshire, where additional warehouses were built in 2023. It also began the construction of a new Ben Lomond gin distillery and visitor centre in Luss early this year.

Loch Lomond has over recent years built strong ties with the world of golf as sponsor of The Open Championship and the AIG Women’s Open Championship though its partnership with the R&A.

The distiller notes in the accounts that it has continued to add to its team. The company had at the time of filing 362 employees across four operational sites, following a 60% increase in its headcount over the last five years.

Mr Matthews has headed the company since leading the deal which saw private equity firm Exponent acquire Loch Lomond from the Bulloch family in 2014. A secondary buyout then saw the majority of shares acquired by Hillhouse Capital Group of China in 2019.

The distiller said its accounts continue to reflect the structure of the company’s acquisition in 2014, which was executed as a sale of assets rather than a sale of shares.

Loch Lomond explains in the accounts: “Whilst this was the optimum deal structure from a legal and tax perspective, it means that the statutory accounts record the cost of maturing stock produced before 28 February 2014 in the profit and loss account at its market value (i.e. the cost at which the stock was acquired as part of the acquisition) rather than at production cost, underlying EBITDA (earnings before interest, tax, depreciation, and amortisation) is calculated by removing this adjustment.”

Meanwhile, the firm said there was no update on the recent scare over a batch of counterfeit Glen’s Vodka, which found its way into convenience stores in Glasgow and Lanarkshire. The Food Standards Agency issued a warning earlier this month for consumers to be aware of the fake bottles, which it said may have a strange smell and taste that is different to genuine vodka. The counterfeit bottles were found to contain isopropyl alcohol that is not intended for human consumption.

Loch Lomond said its priority is the health and safety of the public and that it has been supporting the FSA and other authorities involved to “address the matter urgently”.