Kilchoman Distillery on Islay eyes global growth after £22.5m funding deal

THE co-founder of Kilchoman Distillery has underlined the huge growth it has seen in recent years as the single malt maker revealed plans to expand production at its Islay home.

Kilchoman, which is set on 2,000 acres of farmland, was the first new distillery to open on Islay in 124 years when it was established by Anthony and Kathy Wills in 2005.

Having undergone rapid expansion since its first single malt was launched three years later, with its whisky now sold in 50 countries, it has now secured a huge funding package from Barclays to drive its continuing growth.

The £22.5 million deal will be used to expand production at the Kilchoman farm distillery on Islay, and to increase the presence of its single malt in its four biggest markers overseas: France, Germany, the US and China.

The investment will allow the distiller to raise production by 40 per cent to 625,000 litres of alcohol this year, with work simultaneously under way on the construction of a new warehouse to allow it to store further casks of whisky for maturation.

The expansion is designed to ensure Kilchoman is able to continue meeting the demand it is forecasting for its single malt in the years to come, having seen sales rise throughout the pandemic as drinkers have swapped expenditure on eating and drinking in the on-trade with buying whisky online.

Despite the closure of the hospitality sector and travel retail outlets for large parts of the last two years, many whisky distillers have mitigated the loss of sales by successfully developing sales online and direct to consumers. And they are confident that those trends will continue even as the broader economy reopens.

Mr Wills said Kilchoman, now one of nine distilleries on Islay, said the company saw its turnover increase its turnover to £9 million in 2021, up by over 30 per cent on the year before, noting that it had benefited from consumers buying whisky online during periods of lockdown.

“We have experienced considerable growth in the last four to five years,” he told The Herald. “[It] means we have had [increase] operating production to keep up with demand.”

He added: “In whisky… you have to look ahead.”

Kilchoman, which employs 40 people, drives the majority of its sales through its core Machir Bay single malt, the “volume expression we sell around the world”, which it supports with the release of other expressions.

Mr Wills noted that the rise in capacity at Kilchoman is “all dedicated to single malt… which has been growing very well for the last 12to 15 years”. This contrasts with the strategy at many other distillers, which sell whisky for the blended Scotch market.

The expansion plans are supported by the development of further warehousing on Islay, which has been area of continual investment at Kilchoman since it was founded. Mr Wills noted the warehousing programme will continue, and stated: “[You] always have to be ahead of the game… we are well placed for the next 20 years.”

Mr Wills is managing director and master distiller of the distillery, while his wife Kathy heads the visitor centre. They are now joined in the business by their three sons George, James and Peter, who manage its sales and marketing activities. Business at the visitor centre has been “up and down” because of restrictions during the pandemic.

Islay Heads, general manager at 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.”

Andy Hall, head of Barclays corporate banking in 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.”

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