Kilchoman Distillery said it will produce around 140,000 litres of alcohol this year and is also starting to centralise its warehousing following an investment of £500,000 in building its own site.
However, founder and managing director Anthony Wills said he is comfortable with the current production levels and has no plans to expand that side of the operation.
He said: "Our full capacity is around 160,000 litres of alcohol and this year we will produce around 140,000.
"So we can still step it up a bit next year but we are keen to keep it at a level we can cope with.
"We are delighted with the progress the company is making and though we are a very small business we are seeing very good growth."
Casks at various sites around the island are now being brought back to the new Kilchoman warehouse, just a few miles from the distillery, following a near three-year project to get the structure built.
It was opened earlier this year thanks to a £450,000 loan from Clydesdale Bank and £110,000 funding from Highlands and Islands Enterprise (HIE).
The warehouse will eventually house 10,500 casks of whisky.
Mr Wills said: "We always knew that at some point we would need to invest in warehousing. It took a little longer than we hoped to get it all finalised with issues with planning and finding the right bit of land.
"Islay still doesn't really look upon light industrial and commercial buildings very favourably, which is frustrating and caused us a lot of headaches."
Kilchoman, the first distillery built on Islay in 124 years, released its first spirit three years after production started in 2005.
The core brand is the Machir Bay single malt.
Mr Wills said the UK remains its best market but the company is now exporting to more than 35 destinations.
The US, Canada, Germany France and Sweden are among the biggest foreign markets for Kilchoman products.
Mr Wills added: "The strength of the single malt category gives us the confidence to produce at full capacity and if we need to invest in more warehouses we will do."
Claire Simers, from HIE, said: "The malt whisky industry is enjoying a tremendous surge in popularity with mature malt markets doing extremely well, and Kilchoman Distillery is now taking advantage of the increase in these sales."