A new distribution deal will see the Speyside Distillery increase its whisky production.
Speyside Distillery has signed a major new distribution deal which will lead to a 66% increase in production of its single malt whisky.
The agreement with Luzhou Laojiao International Development (HK) Co Ltd – a major force in the global duty free retail market – will see production rise from 600,000 litres to 1 million litres a year.
The deal will also see Luzhou Laojiao distribute the artisan distillery’s SPEY and Beinn Dubh brands in China, where sales of Scotch whisky continue on an upward trend, increasing by 34.8% in the first half of last year alone.
Owners Speyside Distillers Ltd said the increase in production would not lead to the introduction of any new automation processes, but it is anticipated that demand could result in up to two new jobs being created.
The deal will place the company’s spirits portfolio in duty free outlets across China, the United States and other key global markets, and Luzhou Laojiao will also handle distribution of Speyside Distillery products across China in its own retail stores.
John McDonough, chief executive officer of Speyside Distillers, said: ‘Although our brands have been present in China for a number of years, most of the distribution and sales activity has been within the southern provinces.
‘This distribution agreement with Luzhou Laojiao will enable us to move to a completely different level and will help to meet the growing demand for single malt Scotch whisky from China’s urbanised, affluent young professionals.
‘We anticipate that the supply demand for global duty free and duty paid within China will have a significant impact on production, which we forecast will rise by around 66% from our current 600,000 litres of spirit a year to 1million litres.’
Senior staff from Luzhou Laojiao signed the distribution agreement while on a visit to Speyside Distillery, which is based close to Kingussie at the foot of the Cairngorms.
Its award-winning range comprises five core single malt expressions, which is complemented with regular limited edition bottlings from historic warehouse stock. The distillery added Beinn Dubh ruby black whisky to its collection in 2015 and, more recently, the Byron’s Gin range.
Managing director Patricia Dillon said: ‘Our international reach has grown significantly in the past five years and our brands are now present in 34 different countries.
‘Due to John’s existing business operations in Taiwan when he bought the distillery, we were very quickly able to cultivate a market for SPEY in that territory and it has historically always been a key driver for sales.
‘Around 70% of our global sales currently come from that region, but this agreement with Luzhou Laojiao for global duty free and internally within China sets us on a path that will challenge the volume that we have in Taiwan.
‘China is a market that we have watched very diligently for a number of years, but we needed the support of a major partner before we could contemplate making the significant inroads that we now anticipate.’
Sales of single malt Scotch whisky has rocketed in China in recent years.
Figures from the Scotch Whisky Association show that Singapore, from where a large proportion of whisky is transhipped to China and Southeast Asia, was the eighth largest export destination for Scotch whisky last year.
Speyside Distillery has been in production since 1990 and is operated by Speyside Distillers Ltd. For further information visit www.speysidedistillery.co.uk. In addition to the SPEY range, the distillery produces Beinn Dubh and Byron’s Gin.
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