Via Financial Times

On the far north-west coast of Scotland, a small whisky distillery is doing things a little differently.

Founder Annabel Thomas says that Nc’nean, which started in 2017, is the country’s first fully organic distillery. The business is based on the Drimnin estate near the Isle of Mull, where the former Bain consultant is hoping to shake up the traditional image of Scotch with a more experimental and sustainable approach.

Nc’nean’s ethos is to appeal to a younger and diverse consumer base who are less inclined to drink neat spirits. Ms Thomas believes many people reject Scotch in favour of bourbon or Irish whiskey because it is more acceptable to mix the latter spirits with other ingredients to make cocktails. She aims to show you can drink Scotch in different ways, as well as trying to shift public perceptions. “If you look at the Instagram profile of traditional whiskies, it’s just old men,” Ms Thomas says.

Her parents bought the Drimnin estate in 2002 as a retirement project — Ms Thomas grew up in Essex, but spent many holidays in Scotland — and there was talk among the family about starting a distillery. In 2012, Ms Thomas, 36, who was by then at a career crossroads and wondering whether to leave consultancy, took a few distillery tours. She found they all highlighted tradition: “This is the way it has always been done”. By the fifth distillery, she says, “I could have done the tour myself”.

Scotland has more than 130 malt and grain distilleries and Ms Thomas decided she could take advantage of the wider boom in craft gins, beer and wine, by applying a sustainable approach to whisky making.

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The Scotch industry contributes £5.5bn to the UK economy, but many Scottish distilleries are owned by global drinks groups such as Diageo and Pernod Ricard. This provides consistent quality but, Ms Thomas argues, at the cost of innovation.

Nc’nean can try things out, for example by experimenting with different yeasts, which are used to make a “wash” — a kind of strong beer — which is then distilled twice and put into casks to age. As defined in Scotland, it becomes whisky after three years and one day.

Nc’nean distillery in Drimnin, north-west Scotland
A ‘wash’ — a kind of strong beer — is distilled twice and put into casks to age © Richard Kellett/FT

Ms Thomas left Bain in 2013 to work on the distillery full time. She had the site but raising the money and converting the farm buildings was challenging — and so is her commute, as she is based in London where she lives with her husband and young daughter.

Just as Nc’nean was about to undertake its first distilling in 2017, its master distiller Jim Swan died suddenly. Replacing him will be tricky, Ms Thomas says. “It will be difficult to find someone who has the experience and is not just going to make a traditional whisky.”

Business challenges

Building a distillery, and running it for three years before making any revenue is not an easy sell to investors. Ms Thomas was surprised by the resistance from angel investors, a group she had thought would be interested in start-ups such as Nc’nean.

The first round of funds was raised through family and friends via the Seed Enterprise Investment Scheme. It offers tax incentives to investors and is limited to £150,000. This funded the architectural and engineering development.

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It then took until July 2015 to raise the rest: about £5m in equity, £2m of debt and a £600,000 grant from the EU via the Scottish government.

It was a test of mental endurance. “We couldn’t say this is our prototype whisky, because we didn’t have a distillery to make it in, let alone have had three years to mature it,” Ms Thomas says. What was really needed was a cornerstone investor. Luckily, one was found through a “really random” old work connection of Ms Thomas’s father.

Once the money was secured, building began. The remote location meant builders had to be housed and fed for at least a year and it was difficult to retain site managers, “so there was no continuity,” she adds.

Annabel Thomas, founder of Nc’nean Distillery, Scotland's first sustainable whiskey distillery in Drimnin
The distillery’s biomass boiler was made in Germany and transported across Europe © Richard Kellett/FT

The installation of the biomass boiler added a new dimension to logistics management. Made in Germany, it was transported across Europe and at Fort William transferred on to a smaller lorry. A vehicle escort was needed to guide it through its last leg along Drimnin’s country lanes. To add to the headache, a crane also had to be transported to the distillery.

Revenues come from pre-selling casks at prices starting from £3,000. Nc’nean has more than 1,500 casks — a mix of red wine, sherry and bourbon barrels — ageing in its warehouses.

So far £360,000 of whisky has been sold to buyers all over the world ahead of its release in 2020. Ms Thomas says the Germans and Dutch, in particular, have whisky clubs which often buy a cask to share among members.

The cask warehouses at Nc’nean distillery, in Drimnin, Scotland
Nc’nean has more than 1,500 casks — a mix of red wine, sherry and bourbon barrels — ageing in its warehouses © Richard Kellett/FT

Nc’nean’s “experimenting” has also come up with an innovative product — its Botanical Spirit. It is unaged whisky spirit redistilled with botanicals, including sorrel and heather, made by west-coast gin distillery Beinn an Tuirc. Ms Thomas says it turned out to be useful practice for building the brand and learning how to get a product to market.

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Advice for entrepreneurs

When setting up a business, Ms Thomas believes the important thing is to ask yourself the “why” question. “If you don’t have a clear and differentiated ‘why’, you’re probably not going to have a very good business.”

You also need to know if you can persevere, and she suggests talking privately to other entrepreneurs. Founders, she adds, “don’t often tell you about the hard stuff”. Entrepreneurs need to be prepared to deal with uncertainty and a constant low-level stress. Ms Thomas may no longer deal with the high-pressure periods that came with working at Bain, but “you become symbiotic with the business, and for people who like to separate work and play, it becomes almost impossible,” she says.

The Drimnin estate sits just north of the Isle of Mull
The Drimnin estate sits just north of the Isle of Mull © Richard Kellett/FT

The next five years will be critical for her business. This month the distillery launched a crowdfunding campaign to raise £1m and reached its target within days. Once the whisky is launched in the UK next year, the plan is to go into Europe — France is Scotch’s second biggest market by value.

Ms Thomas spends every third week in Scotland. Balancing the demands of working between Scotland and London means she has to plan travel and meetings far in advance.

“I’m not going to lie, it is not exactly easy,” she says.