A CO-OPERATIVE of small Scottish spirits producers has revealed it is close to securing a game-changing distribution deal with Ocado, the online retailer.
The Scottish Craft Distillers Ltd, the new trading arm of the Scottish Craft Distillers Association (SCDA), is holding talks with Ocado over a deal that will see spirits from 10 to 12 emerging distillers sold to consumers in England and Wales.
It would see the spirits, including whisky, gin and vodka from the Glasgow Distillery Company, Strathearn Distillery and Ogilvy, become available for sale through the Ocado website and delivered to consumers through the company's powerful distribution network.
Ocado, which recently built the Morrisons online platform and delivers goods supplied by Waitrose, is believed to make as many as 200,000 deliveries to homes in England and Wales per week.
Liam Hughes, the co-founder of the Glasgow Distillery Company and vice-chairman of the SCDA, said it was highly unlikely that micro distillers would gain a listing with a player as large as Ocado on their own.
But by joining forces with like-minded producers, they represent a stronger commercial case.
Mr Hughes, who launched Glasgow Distillery Company last year with accountancy boss Ian McDougall, said: “Collectively we can be so much stronger and effective with our resources. Individually... we are not going to have the same effect.
“Ocado said they would not be interested in us individually, but if you bring products from 10 to 12 emerging distillers in Scotland we’d be massively interested.”
Mr Hughes added: “For them it is nirvana - they don’t have to deal with 10 to 15 distillers.”
The proposed deal will see the each of the distillers send products to a central location in Scotland. It will then be assembled in mixed pallets and sent to Ocado’s giant warehouse south of the Border.
Mr Hughes said there is potential for Ocado to schedule the promotion of each of the producers by focusing on a different one each month. Ocado has also signalled interest in selling gift packs from the distillers, he explained.
“This model gives the very smallest husband and wife business, with the smallest of distilleries, the chance to get to a market they would not otherwise have,” Mr Hughes said.
"Ocado has in excess of 200,000 deliveries per week and when its new warehouse opens in 2016 it will have access to 99 % of the 55 million people in the English marketplace, which is a substantial opportunity for the Scottish distillers."
The three founder members of the co-operative are Strathearn Distillery, Ogilvy and the Glasgow Distillery Company.
Mr Hughes will shortly represent the co-operative, which is linked to trade body the Scottish Craft Distillers Association, on a trade mission to Dubai UK Trade and Industry.
Talks are scheduled at the event in November with buyers from some of the biggest hotel groups in the Middle East, which will see the delegation market spirits from the co-op’s founders, as well as products from other Scottish micro distillers. The door is open for other producers to join the co-op.
Mr Hughes, who will be accompanied on the trip by Tony Reeman-Clark, chairman of the SCDA and a co-founder of the Strathearn Distillery, said that by working together distillers can significantly reduce the cost of taking part in such delegations.
He added that the Glasgow Distillery Company, Strathearn and Ogilvy are currently looking at jointly funding the appointment of a brand ambassador to drive sales of their spirits in London.
If the initiative gets off the ground, he said there would be potential to roll the model out in markets around the world.
Mr Hughes said: “Ourselves, Strathearn and Ogilvy are working on a plan to put a brand ambassador into London to front the three brands.
“For us, that is a massive investment. But do it across the three companies, with the support of Scottish Enterprise [is achievable].
“If it works, we can adopt the strategy in other markets.”
The SCDA, meanwhile, is hosting a reception to toast its "coming of age" at the Scottish Parliament on September 22. It will also host its inaugural conference at Atholl Palace, Pitlochry, on October 5 and 6.
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