Who's Hot: Glenora Distillery



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[Business Development/Leadership & Management/Marketing & Selling]


Who's Hot: Glenora Distillery

Hed: A Shot of Gold


Deck: Despite some financial hardships, the first batch of whisky from North America's only single-malt distillery is bottled up and selling out.
Pull quote: "Imagine operating any business whose product won't generate a cash flow for eight to ten years." -- Lauchie MacLean, CEO, Glenora Distillery

You amble on over to see what the neighbors are up to. They ask you to help interpret some blueprints, then you lend a hand assembling some machinery. The next thing you know, you're the president and master distiller at North America's first and only single-malt whisky distillery.


Such is the abbreviated story of retired engineer, Ken Roberts, of Nova Scotia's Glenora Distillery. In October 2000, Glenora bottled its first batch of Glen Breton Rare Canadian Single Malt Whisky, the first premium single malt produced on this continent.
"Any distillery could, in theory, distill a single malt," says Glenora's CEO, Lauchie MacLean, "but ours is the only one in North America built for that sole purpose."
A single malt is distinguished from other whiskies by its exclusive use of malted barley as a base, rather than other grains such as rye. Typically, the product is known as scotch; however, because the Glen Breton Rare is not brewed in Scotland, it can't be called scotch.

The distillery sits on 600 acres of land along the MacLellan Brook in the Cape Breton highlands, and also houses a nine-room inn, a pub, dining room and gift shop, along with six self-contained log chalets in the hills beyond. The site was chosen specifically for water quality. "There were several other locations considered," says Bob Scott, president of marketing, "but testing showed this water to be the best in North America."

A group of local businessmen, headed by Bruce Jardine, now deceased, first brewed the notion for the distillery in the late 1980s. "The Scottish culture – the Gaelic language, Celtic music and clan traditions – are still very much a part of Cape Breton's cultural make up today," says MacLean. "The one thing that was missing was the great practice of brewing scotch whisky."



The first order of business was assembling the distilling equipment, brought in from the Moors and Bowmore Company of Scotland. Roberts successfully lead that charge, then trained in the traditional "pot still" method of single-malt distilling with a group of experts, also brought in from Scotland.

On the Rocks


Ironically, however, the company's very purpose – to brew a traditional single malt whisky – almost sent the company flowing down the drain, twice. "It has been a financial hardship and very capital-intensive to operate on a day-to-day basis," says MacLean.
The problem: Premium single malt takes a while to age. "Imagine operating any business whose product won't generate a cash flow for eight to ten years," says MacLean.
And it's not exactly a low-overhead operation. Beyond the startup costs, the whisky-making itself does nothing but drink money. The all-important barley is imported from Scotland for $600 to $700 per ton, and two tons per day are needed. Add to this the yeast, shipped in from South Africa, the special oak casks, along with the utility costs, payroll and other expenses.

The distillery went bankrupt in 1991, just a year after it was built. A restructuring period followed and some of the original investors decided to buy back in. But it went under again two years later. Following a second round of restructuring, MacLean came on board and led a group of five remaining shareholders in buying it out of receivership in 1994.

"I am an operator and investor in many venture capital startups," says MacLean, who hails from Cape Breton. "I bought the distillery because of its uniqueness -- and because it was in Cape Breton."
This time the investors would hang on. Not only was their cash crop – the Glen Breton Rare – that much closer to seeing the light of day (only six years to go), but with MacLean's venture capital connections, they made a point of avoiding the banks as much as possible

Focusing on Hospitality


More significantly, however, they focused on Glenora's other, more immediate income generator -- the hospitality trade – and following a concentrated marketing initiative, it has recently become a hotspot for American travelers. "Now, between 60 and 70 percent of our June to October business is from the U.S.," says Scott. "They love the laid-back Cape Breton ways."
To further fund the operation, the company also diversified its product line to produce a handful of other liquors that don't require lengthy aging. Among these are some rums and its Cape Breton Silver – "a moonshine that we can't (legally) call 'moonshine,'" says Scott, of the high-alcohol, unaged version of the single malt.
And slowly though she goes, Glenora is the first distillery in North America to produce its own single malt whisky, a fact the company intends to capitalize upon. "The single malt is a completely unique product," says Scott, "so it has a special appeal to whisky connoisseurs and collectors."

This in mind, Glenora set aside the first 500 bottles, numbered them and had them signed by master distiller Ken Roberts. The first bottle has a price tag of $15,000 (Canadian), down to $300 for number 500. Scott says that hockey great Wayne Gretzky is interested in number 99 (his jersey number), which they'll pass off to him for a mere five grand.

Glenora also plans to stay small, thereby ensuring its product's unique status. "Our strategy is to stay limited and rare," says Scott. "We're never going to become a mass producer, because that just doesn't work for the small guy."
In fact, the distillery only produced 1,000 cases of the Glen Breton Rare, and in less than one month, it was down to 50 cases. Currently, the product is only available in limited outlets across Canada, and sells for between $75 and $120 per bottle depending on the province.
Taste of Gold

So, what does this liquid gold taste like? "I was pleasantly surprised," says Peter Rockwell, category analyst with the Nova Scotia Liquor Commission. "It has all the characteristics of a fine whisky, Canadian or otherwise."


It has apparently impressed fellow Nova Scotians as well – for the time being. "Local response has been exceptional," says Rockwell. "But Nova Scotian consumers have a history of jumping on the latest thing, only to abandon it later for their familiar favorites." And there, that would be rum. "It's that maritime heritage thing," says Rockwell.
How about discerning scotch drinkers? "I'm a little suspicious," says Richard Smith, a former Glaswegian now living in British Columbia. "I honestly don't see how it can compare to the traditional whisky from Scotland. And you can get a nice 20-year-old scotch for half the price."
Glenora, though, is banking on people being willing to pay the big bucks, locally and beyond. "At this stage the distillery is finally making a small profit," says MacLean. "We plan to grow slowly, and introduce the product into Germany and possibly Japan in the spring of 2001."

And yes, into the U.S. also. "But we want to learn to crawl before we walk," says Scott, "so we're making a point of carefully handpicking the U.S. distributors for the best returns."

One thing Glenora isn't concerning itself with is competition. "It would cost about 10 million dollars to start an operation like ours," says Scott. "And when you have to wait so long to sell your product, you're not going to run into too many others."
So if you're wondering what the neighbors are up to, chances are they're not building a single-malt whisky distillery.
Slàinte!
At a Glance

Name: Glenora Distillery

URL: www.GlenoraDistillery.com

Location: Glenville, Nova Scotia

Founder: Bruce Jardine

Founded: 1989

Industry: Distillery

Employees: 35 (summer), 8 (winter)

Revenues: N/A

Related Links


Glenora Distillery

Nova Scotia Liquor Commission


SOURCES:
Lauchie MacLean

CEO


Glenora Distillery

P.O. Box 181

Mabou, Inverness Co.

Nova Scotia

B0E 1XO

902 468 6516



bfc@ns.sympatico.ca (Lauchie MacLean)
Bob Scott

President of marketing

Glenora Distillery

Same phone and address



breton@ns.sympatico.ca
Peter Rockwell

Category Analyst

Nova Scotia Liquor Commission

93 Chain Lake Drive

Bayers Lake Business Park

Halifax, Nova Scotia

B3S 1A3

902 450 5932



bytheglass@nsliquor.ns.ca
Richard Smith

Box 449

Kaslo, B.C.

V0G 1M0


250 353 2686

no e-mail



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