October 21, 2017

Boozy boom – 53 new distilleries launched in the UK in just one year

Two refreshing summer cocktails with lime and mint

53 new distilleries were opened in the UK in 2016* says UHY Hacker Young, the national accountancy group, as artisan drinks brands continue to take market share from the global giants.

UHY Hacker Young says that start-up activity is also being spurred by the number of M&A deals taking place in the “artisan” alcohol sector.

Examples of acquisitions in the last year include:

  • Sipsmith, one of the leaders in the new wave of boutique gins in the UK was acquired by Japan’s Beam Suntory in December 2016;
  • Scottish-based Edinburgh Gin was acquired by Ian McLeod Distillers (10th largest Scotch Whisky producer) in September 2016;
  • French conglomerate Pernod Ricard acquired Monkey 47, a German gin produced in the Black Forest, in January 2016.

UHY Hacker Young says that the £1bn valuation put on craft beer brand Brewdog by an investment from US private equity firm, TSG Consumer Partners, is likely to spur more activity both in the craft distillery and craft beer segments.

UHY Hacker Young adds that England saw a 25 per cent increase in new distilleries over the last year, jumping from 28 to 35. The ‘Gin-naissance’ has seen many new gin distillers pop up as consumers become more discerning when it comes to spirits.

Recent research shows that in 2016, UK sales of gin broke the £1bn sales mark for the first time**.

In Scotland the number of distilleries has grown by 50 per cent in the last year, with 12 opening in 2015, and 18 in 2016. Scotch Whisky is currently one of Scotland’s top exports.

James Simmonds, Partner at UHY Hacker Young, says: “Both the craft spirits and the craft brewery sectors are going through a period of explosive creativity. You can see that in everything from the logos, branding and advertising of these products.

“What is more is that the quality of the product is streets ahead of their big brand competitors. It is no wonder that the global drinks giants are worried. And the best way they have found to deal with that new competition is get out cheque books and buy them.

“But for every winner that will be many more losers – and some of the business plans we have seen for start-ups in this sector suggest a nasty hangover for some.”

New gins and whisky distilleries which opened in 2016 include:

  • The Distillery: located on Portobello Road in West London, home of Portobello Gin and the world-famous ‘Ginstitute’;
  • Manchester City Distillery: located on Red Bank, Manchester, home of the brand new Three Rivers Gin;
  • Toulvaddie Distillery: located in Ross-shire in the Scottish Highlands which claims to be the first distillery to be opened by a woman in 200 years, producing single-malt whisky.

Commenting on the industry, Miles Beale, Chief Executive of the Wine and Spirit Trade Association, said: “The rapid growth of distilleries, an increase of 135 per cent since 2010, is yet another positive sign of the UK spirits industry going from strength to strength. From traditional products like Scotch, to the Great British gin boom and newer products like English and Welsh Whiskey, it is an exciting time for spirits producers across the UK. Consumers here at home and around the world have developed a real thirst for top quality British spirits, and a new distillery is coming online at the equivalent rate of one per week to rise to that challenge.

“As the Government negotiates free-trade deals with both Europe and third countries there is a real opportunity for the UK to boost its exporting capacity by trading quality spirits overseas. We have already seen how successful and in-demand British gin is to 139 countries around the world. But we believe with the right support the industry can go further to access more markets overseas.”

Jump in distilleries opened in the last five years in the UK

*Year end Dec 31st
**Wine and Spirit Trade Association