By Scott Wright

THE company that owns the prestigious Scotch Malt Whisky Society has declared it is confident of growing membership in Europe after investing to solve Brexit-related delivery problems.

The Artisanal Spirits Company established a warehouse in mainland Europe to improve delivery times for members after Brexit red tape had meant it was taking “months” to ship stock to customers on the continent.

The investment, which means customers in Europe are now receiving their orders much more quickly, came in a year that saw global membership of the Society grow by 18 per cent to more than 33,000 in the period ended December 31. Slower growth in Europe was offset by exceptional expansion of new members in China, while in the UK there were 20% more members at 16,400 by year-end.

Overall membership has continued to grow since December 31, with the total sitting at 34,200 at the end of February – 3% more than the year before.

David Ridley, executive managing director of Artisanal, conceded 2021 had been “difficult” for existing European members but said: “We are certainly very buoyant around Europe at the moment. The recruitment will be much stronger because we have the return of physical events.”

The SMWS, which was established in 1983, provides its members with the opportunity to buy whisky from more than 100 distilleries in 20 countries, and access to events at its network of venues. Owner Artisanal, which floated last year, grew revenue by 21% to £18.2m, ahead of expectations.

Mr Ridley said that with the exception of the issues caused by Brexit, the company had seen growth in all key areas last year, and highlighted the benefit of the Society’s venues re-opening after lockdown, despite the emergence of the Omicron variant in the final quarter. Sales in the company’s UK venues, which are based in Edinburgh, Leith, Glasgow and London, were matching pre-pandemic levels by the end of the year.

And Mr Ridley expressed confidence in the outlook for the company in the current year, with sales currently running 30% ahead of last year. It has no exposure to either Ukraine or Russia, and is detecting no impact as yet from the reintroduction of Covid lockdowns in China.

Asked if the company was concerned about the effects of rising inflation, both on the cost of buying whisky and on consumer confidence, executive finance director Andrew Dane said Artisanal already holds the stock that it intends to sell most of the way through to 2028, declaring that it is “inflation proof on the supply side”. “Inflationary pressures… we have got fantastic protection against them,” he said.

He also said there has been “no pushback” to the company to the price rises it has begun to put through.

Mr Ridley added: “From what we have seen, consumer spending power is still there. The audience that we have [has] good levels of discretionary income. We are not seeing any signs of slowdown as far as consumer spending is concerned.”

Artisanal raised gross proceeds of £26m from its initial public offering to the junior alternative investment market in June. It has used the funds to buy stock, launch spirits brand JG Thomson, increase its stakes in joint ventures in China and Japan, and invest in a new logistics warehouse in Uddingston, which will be used for maturing stock, bottling and order fulfilment.

Mr Ridley said “we are moving in as we speak” to the Uddingston facility, with steel work for cask warehousing recently delivered and the bottling line, a “tried and tested” facility being bought from Glenmorangie, arriving next. Mr Ridley said the line, which has previously been used to bottle SMWS products, would give the company a 2% margin improvement.

The company is on course to open the warehouse, which it expects will employ around 10 people when it is fully up and running, in the second half of the year.

Meanwhile, Mr Ridley said Artisanal has opened talks with distributors in Europe and the US over listing the JG Thomson blended Scotch whisky brand, which is available for sale to everyone – not just SMWS members – on a dedicated website. The brand has also been listed by selected retailers and on-trade operators in the UK.

The company noted yesterday that the decision to “front load” investment had resulted in it making a loss during the year; it reported a loss after tax of £3.4m, compared with a loss of £1.6m the year before, which included £900,000 of exceptional IPO costs.

Shares in Artisanal closed up 0.5p at 75.5p.