IN this week’s SME Focus we hear how drinks trade experts found inspiration in the past for a business that has been quick to develop a global following.

Name:

Scott Watson and Brian Woods.

Age:

43 and 42 respectively.

What is your business called?

Crucial Drinks.

Where is it based?

Ayrshire.

What does it produce, what services does it offer?

We are a boutique drinks business that ‘reimagines spirits’ to create innovative brands across the malt whisky and rum categories that have clearly differentiated trade and consumer propositions through unique brand stories.

To whom does it sell?

Third party distributors in around 40 markets globally.

What is its turnover?

We have a seven figure turnover and expect to grow it to north of £10m over the course of the next few years.

How many employees?

10.

When was it formed?

We worked together nearly 20 years ago at Diageo and have always kept in touch, bouncing ideas off each other before setting up our first brand, The Lost Distillery Company. This was launched in late 2013. Since then, our portfolio has expanded to include Six Saints Rum from Grenada and West Indies Rum & Cane Merchants with another release on its way.

Why did you take the plunge?

We spotted a gap in the market when the rapid growth of craft Scotch whisky globally meant independent producers were struggling to meet the demand for artisan expressions, while some larger players were buying up smaller distilleries and limiting the number of bottles released to fuel demand and protect their own brands. This created a void in the market, estimated at £1 billion in retail opportunity.

We decided to seize the opportunity and create our first brand, The Lost Distillery Company, which provided multiple styles of Scotch whisky under one umbrella.

What were you doing before you took the plunge?

We both worked in the global drinks industry. I worked in business management and distribution and Brian was in marketing, commercial and management roles.

While working in the whisky industry, we realised that half of the distilleries across Scotland had closed, which seemed a real tragedy. So, we started to think about how we could bring historic brands such as Gerston back to life and with this The Lost Distillery Company was born. Once we had the idea for our brand, we did lots of research into lost distilleries across Scotland and pulled together archive material to help us create our first samples by blending single malts to create modern interpretations of each lost whisky.

We then held a series of close-knit focus groups with distributors and sales people and the feedback was overwhelmingly positive.

Joining the Entrepreneurial Spark start up programme gave us the push to take the plunge. Their support opened up various networks in turn, which helped us secure funding through organisations like Scottish Edge and enabled us to develop our business plan.

I joined in the first Ayrshire intake of Entrepreneurial Spark early 2012. Brian joined a year later when he left his job. We completed the programme and stayed there to remain part of the culture and help other entrepreneurs for four years.

Our initial focus concentrated on developing the branding, packaging and marketing, as well as our website, an extranet for trade partners and an international distribution network.

How did you raise the start-up funding?

We put a lot of the capital in ourselves and Scottish Edge, Entrepreneurial Spark and East Ayrshire Council were very helpful too. We are also fortunate enough to have a small group of ultra-high net worth investors who are passionate about what we do and are in it for the long term. Building brands takes time.

What was your biggest break?

We hope our big break is still to come but the real high point for us to date was the day we launched The Lost Distillery Company at Vinexpo, a huge wine and spirits trade show in France. We were initially apprehensive about showcasing our products to the world on a global stage, however, the feedback and general air of excitement around the brands was overwhelming. Our aim was to secure six distributors, instead we returned with offers from 20 from the globe, as well as securing a significant amount of funding.

What do you most enjoy about running the business?

We get to live on the beautiful west coast of Scotland while running our business, which was a huge benefit for us and our families. Working for yourself compared to a large corporation allows you to be nimble and react quickly to opportunities, which we thrive on. We both love the drinks industry. It’s sociable, we get to entertain and introduce people to our brands, which we are very passionate about.

What do you least enjoy?

As with most business owners, we find it difficult to switch off and have downtime. We also travel a lot, which can take us away from our young families for weeks at a time. On top of that, we no longer turn left on planes, which was taken for granted when we worked in the corporate world!

Excisable products like whisky and rum come with a large amount of red tape making it a difficult and expensive area for a small team and a start up to navigate.

What are your ambitions for the firm?

The aim is to invest more behind the brands and move the business to deliver a £4m gross margin in two years by doubling our team and tripling our revenue. The long-term aim is to supply 80 markets worldwide.

Our current focus is on whisky and rum, but we’d like to branch out into other spirits like vodka and gin, either by acquisition or new brand development.

What are your five top priorities?

Developing our export business across the world, particularly in the US

Investing behind our existing brands.

Seeding our brands in the UK through the right partners.

Bringing the craft of whisky making back to Ayrshire and helping regenerate the area.

Being opportunity hungry - developing brands to fill unmet trade and consumer needs.

What could the Westminster and/or Scottish governments do that would help?

When we tell our European and American partners about the help that export driven businesses receive in the UK, they are amazed. We can honestly say the support we’ve had from central and local Government has been terrific. The future following Brexit still remains unknown, so what businesses really need is a period of stability and careful handling from both governments.

What was the most valuable lesson that you learned?

If you’re going to fail; fail quickly, cheaply and learn from it.

How do you relax?

I’m a keen runner and I like to get outdoors and spend time with my wife Christy and young sons, Rory and Jay. Brian is passionate about food and drink and likes entertaining at home with his wife Kathrine and spending time with his children, Harry and Georgie.