Tuesday, January 15, 2019

Islay Update

A lot has happened on Islay since my visit to the epicenter of Hebridean distilling in the spring of 2012. With the rising popularity of whisky in general and Islay whisky in particular over the last two decades, the stage has been set for numerous expansions and several new distillery projects. Let’s have a look at the current state of development on the island.

When I arrived on Islay, the whisky industry there was in pretty good shape, especially considering how bad things had gotten in the 1980’s and 1990’s. Caol Ila had just re-opened after a six month closure for upgrades which included a larger mash tun and two additional washbacks. Kilchoman, having gone into production in December of 2005, was Islay’s newest distillery and the first one to be built on the island in 124 years. Bruichladdich was on the cusp of being sold to Remy Cointreau (which wasn’t public knowledge at the time) 11 years after having been rescued by a group of private investors in 2001, following an eight year shut down. Ardbeg was also flourishing after having been rescued; the distillery was silent from 1981 to 1989, then saw minimal production (operating just two months a year) from 1989 to 1996 before shutting down again. Salvation came to Ardbeg with their purchase by Glenmorangie in 1997. Bunnahabhain was also benefitting from new ownership. Previous owners, Highland Distillers and subsequently the Edrington Group, had focused their efforts on the high-profile distilleries in their portfolio, namely Macallan, Highland Park and Glenrothes, neglecting the lesser known ones before eventually selling them off. When Burn Stewart bought Bunnahabhain in 2003, production had been at a bare minimum for the previous four years. With improved quality, revitalized production and a new range of single malts, things were looking up at Bunnahabhain. Meanwhile, Islay’s other three distilleries, Bowmore, Lagavulin and Laphroaig, were firing on all cylinders.

Starting a new distillery is no easy feat, both in terms of financing and planning approval. While several new projects have been proposed on Islay in recent years, only one has come to fruition thus far. The story of that distillery is intertwined with the story of what once seemed to be the most likely candidate to become the ninth distillery on the island, so I’ll discuss them together.

News of the Gartbreck Distillery first broke in September of 2013 when journalists discovered that a company called Gartbreck Distillery Co Ltd had been registered in May of that year. Jean Donnay, the owner of a French malt whisky distillery in Brittany, is the principal behind this project. His proposed site is an old farm on the shores of Loch Indaal, south-west of Bowmore, which he acquired in May of 2012. Initial plans were for a relatively small distillery, at 120,000 LPA, with traditional floor maltings, direct fired stills, worm tubs and wooden washbacks. Planning permission was obtained early in 2014, but the project stalled, likely due to issues with financing. Then, early in 2015, Donnay entered into an agreement with Hunter Laing, the independent bottler, where they would buy Gartbreck and complete the project, while keeping Donnay on as a consultant.

An adjoining strip of land, which was necessary for warehouses and parking, had not yet been acquired by Jean Donnay. Hunter Laing went ahead and purchased that property, then demolished some of the old farm buildings and began other site work. But the final contracts had not been signed and it seems that Donnay was unhappy with Hunter Laing’s plans for the project, so he pulled out of the deal. Apparently, he was unaware of the fact Hunter Laing had purchased that strip of land which was necessary to the project.

That set the stage for a protracted dispute between the two parties. No doubt the owners of Hunter Laing wanted a price for that bit of real estate which made up for the wasted time and effort they had put into the project. And of course Mr. Donnay likely didn’t want to pay any more for the land than the Laings had.

The owners of Hunter Laing moved on after the Gartbreck project fell through, announcing plans for a new distillery at another site in January of 2016. Planning permission for the Ardnahoe Distillery was granted in September of that year. Located on four acres of land on Islay’s north east coast, Ardnahoe is situated mid-way between Caol Ila and Bunnahabhain. Initial plans called for a manual distillery with worm tubs and a capacity of 500,000 LPA.

Work on the distillery started in November of 2016, but the big news came in January of 2017 when it was announced that Jim McEwan had been hired out of retirement as Ardnahoe’s Production Director. McEwan, having filled nearly every role at Bowmore during his 38 year carrer there, was poached by the new owners of Bruichladdich in 2000. He served as the distillery’s Production Director and Master Distiller through its resurrection and into the Remy Cointreau ownership phase. Retirement came after 15 years at Bruichladdich; a retirement which would last just a year and a half.

In spite of some overly optimistic estimates of the distillery opening in the spring of 2018, they do seem very close to starting production as of the start of 2019 (judging by the photos they’ve posted on social media).
 


Meanwhile, back at Gartbreck, Jean Donnay and the owners of Hunter Laing had finally settled on a price for the disputed land by November of 2017, potentially putting that project back on track. Of course, that was more than a year ago and there have been no updates of any progress since. I suspect that a lack of financing is holding the project back. We’ll just have to wait and see if construction ever starts.
 


2018 saw rumors of a possible distillery in or near Bridgend, the tiny village north of Bowmore and at the intersection of the road that circumnavigates Loch Indaal and the road that leads to Port Askaig. The rumors indicate that this could possibly be a gin distillery. Of course, these are just rumors and no one seems to be putting much weight behind them at this point.

Port Charlotte is another potential new distillery on Islay, but one that doesn’t look too likely at the moment. Port Charlotte was actually one of Islay’s lost distilleries, having been established in 1829 on the shore of Loch Indaal, just a few miles south of where Bruichladdich would later be built. The distillery was renamed as Lochindaal at some point, but after a 100 year run it closed for good in 1929. The plant’s equipment was removed, but the distillery buildings were repurposed and two of the stone warehouses survived as well.

In 2001 the new owners of Bruichladdich immediately began producing occasional runs of heavily peated single malt, which they have bottled under the Port Charlotte label since 2006. When the Inverleven Distillery in Dumbarton was set to be demolished in 2003, Bruichladdich went about acquiring all of its distilling equipment, transporting it to Islay and putting it in storage. Then, in 2007, they purchased former Port Charlotte distillery buildings and put out a press release announcing that they would bring the old distillery back to life using the equipment from Inverleven. Since 2007, those two surviving warehouses at the site have been used to mature the Port Charlotte whisky distilled at Bruichladdich.

Unfortunately, the financial crisis of 2008 put the Port Charlotte distillery plans on hold. Planning permission had been granted by 2012 and some assumed that the deep pockets of Bruichladdich’s new owners, Remy Cointreau, would help the project to move forward. And then nothing happened. Two years later, in 2014, Mark Reynier, who had been relieved of his duties at Bruichladdich after selling the distillery in 2012, announced a new distillery project in Ireland, at a former Guinness brewery. Shortly thereafter, Mr. Reynier acquired the two former Inverleven pot stills and took them to Ireland, pressing them back into service in his new distillery.

It is still possible that the powers that be at Remy Cointreau may someday decide that the time is right to re-start the Port Charlotte Distillery project. But no one seems to be holding their breath waiting for that to happen at the moment.

Rumors of a new distillery to be located just outside the village of Port Ellen, on the road that leads to Laphroaig, Lagavulin and Ardbeg began back in 2014. The man behind the Farkin Distillery project was said to be Sukhinder Singh, the owner of The Whisky Exchange (an online spirits retailer) and Elixer Distillers (an independent bottler which owns the Port Askaig and Elements of Islay brands).

The rumors went unconfirmed for several years, but finally, in April of 2018, Mr. Singh held a public consultation where he outlined plans for the project and took feedback from the area’s residents. Then, in December of 2018, his plans were submitted to the Argyll and Bute Council for approval. The distillery actually has no official name at this time, but Farkin is the name of its proposed location.
 

The site is in the rumored location, about half a mile from Port Ellen, on the road that leads out to Kildalton Cross. The plans are rather bold, calling for a 1.2 million LPA distillery with a modern / contemporary design. In addition to the four pot stills for malt whisky production, there will also be a pilot plant with a gin still and separate column and post still set up to produce other types of spirits. Additional points of interest include underground maturation vaults, a traditional floor malting and a separate tasting lodge closer to the shore for private events.

Pending planning approval, they would like to begin construction as soon as possible, with a goal of distillation starting in 2021.

The biggest surprise in Islay distilling news came in October of 2017, when Diageo announced that they would reopen the long closed Port Ellen Distillery. In spite of being a “closed” distillery, reopening Port Ellen will require that it be built anew from scratch. Let’s take a brief look at the history of this iconic distillery.

Established in 1825, the Port Ellen distillery was built on the site of a former malt mill, next to the village of Port Ellen. Alexander Kerr Mackay founded the distillery with the support of Walter Frederick Campbell, the Laird of Islay. Mackay ran into serious financial difficulties within months of the distillery starting up and production was taken over by three of his relatives; John Morrison, Patrick Thompson and George MacLennan. Then, in 1833, the distillery was taken over (and eventually bought) by John Ramsey, who was a cousin of John Morrison.

This was followed by a period of great success, with Ramsay pioneering direct exports to North America and expanding the distillery in the 1860’s.  Ramsey owned and operated Port Ellen until his death in 1892. His widow, Lucy, then took over running the distillery and upon her death in 1906 it was passed on to her son, Captain Ian Ramsey.

After struggling through the World War 1 years (1914-1918), Ian Ramsey sold Port Ellen in 1920 to a company set up by John Dewar & Sons and W.P. Lowrie and Company. In 1925, that company merged with Distillers Company Limited. Suffering from the combined effects of an economic recession in the UK in the early 1920’s and Prohibition in the US from 1920, the Port Ellen distillery was mothballed in 1929. In spite of the closure, the maltings and warehouses at Port Ellen continued to be used in support of DCL’s other Islay distilleries.

37 years later, at the height of the post-World War II boom, it was time for Port Ellen to reopen. Extensive renovations and rebuilding of the distillery began in 1966 and were complete by the spring of 1967. Most historical descriptions note that the number of stills was increased from two to four at this time, implying that the two stills that were in place at the time of the 1929 closure were put back into service alongside two new ones. The wash stills were each 28,000 liters and the spirit stills were each 25,000 liters.

When Alfred Barnard visited Port Ellen around 1885, the two stills in use at that time were much smaller, with the wash still sized at 15,900 liters and the spirit still at 9500 liters. Of course it is certainly possible that the distillery upgraded to a bigger set of stills in the 15 years after Barnard’s visit, as this was a period of great growth in the industry.

When Port Ellen came back online in 1967 the floor maltings were put into use once again and the stills were direct fired by coal, using mechanical stokers. In 1970 the boiler was upgraded and the stills were converted to steam heating. Then, in 1973, large malting drums were installed alongside the distillery and the use of the floor maltings came to an end. This mechanized malting facility was capable of supplying malt to all three of DCL’s Islay distilleries; Port Ellen, Lagavulin and Caol Ila.

Port Ellen had a capacity of 1.7 million LPA, but actual output peaked at 800,000 LPA before the distillery was again mothballed in 1983, with DCL deeming it to be the least important of the company’s three Islay distilleries. The following timeline shows what has happened with Port Ellen (the distillery and the brand) since the 1983 closure.

In 1986 DCL was bought by Guinness.

In 1987 Port Ellen was officially closed (as opposed to merely being mothballed, a state from which it could easily be restarted).

Also in 1987, the Concordat of Islay Distillers was signed. This was a gentleman’s agreement between all of the distilleries on Islay and Jura, stating that they would purchase at least a portion of their malted barley from the Port Ellen maltings, allowing the facility to continue operating through the downturn of the 1980’s.

In 1990 the distillery was dismantled, with much of the equipment reportedly shipped off to India.

In 1992 Port Ellen’s distilling license was cancelled.

In 1997 Guinness merged with Grand Metropolitan, forming Diageo, which is the current owner of Port Ellen.

In 1998 a 21 year old bottling was released in honor of the 25th anniversary of the commercial maltings.

In 2001 a 22 year old Cask Strength Port Ellen bottling was the first of what would become an annual inclusion in Diageo’s Special Release series. While the whisky produced at Port Ellen was intended for blending and not much was thought of it at the time it was produced, the quality of its extra aged special releases and many independent bottlings has catapulted it to being one of the most sought after of whiskies from Scotland’s lost distilleries.

In 2003 the still house and a few other buildings were demolished so the maltings could be expanded. Two former kilns with pagoda roofs still exist on the site as well as a dozen warehouses. The two that most people see are the rack style warehouses that run along the shore and are emblazoned with the iconic black lettering. Just behind those, running in a long row, are another 10 connected dunnage style warehouses.
 


And of course, in October of 2017, came the announcement from Diageo that Port Ellen would be brought back to life yet again. The plan is to put up a new building somewhere between the maltings and the warehouses. Two new stills will be commissioned, recreating the old ones as closely as possible. They will also attempt to replicate the previous distilling processes where possible. The whisky will be moderately peated at 20 ppm (I believe Bowmore is at 25 ppm) and annual output should be around 800,000 LPA. The original press release called for distilling to commence in 2020, but we are more than a year out from that announcement and there has been no word of planning permission being granted so far. The goal may still be possible, but if they don’t start construction by the spring, a start date in 2021 will be more likely.

What of the existing Islay distilleries? There’s plenty of news on that front as well.

In November of 2017 Kilchoman announced plans to double capacity. They had already constructed a new kiln and malting floor, which can produce twice as much malt as the originals (which are still in use). The construction, which is well underway, includes a new still house, mash house and tun room. They will add a second set of stills, a second mash tun and six new washbacks, all the same size as the original units. The plans also call for five new warehouses to be built over the next five years. This will bring production to 460,000 LPA.

In February of 2018, Ardbeg announced that the distillery was planning to add a second set of stills, doubling capacity. Plans include a new still house for all four stills which be located on an area of the distillery grounds where warehouses once stood. The current still house will then be repurposed to contain new washbacks. This expansion would give Ardbeg a capacity of 2.4 million LPA
 


The folks at Laphroaig have been openly talking about their plans to expand since at least February of 2018. Though no official plans have been submitted for approval as of yet, Laphroaig’s distillery manager has stated that they would like to increase production capacity by up to 100%. Current capacity at Laphroaig is 3.4 million LPA, so a doubling would take that to 6.8 million LPA.
 

Caol Ila was completely rebuilt as a substantially larger distillery in the early 1970’s. The infrastructure that was added in 2011 allowed the distillery to increase its capacity to 6.5 million LPA with its existing stills. While there are no plans to expand production at Caol Ila, in October of 2018 the distillery did announce their intention to build a new visitor center. This will be incorporated into the upper section of one of the warehouses, with a rooftop patio and a footbridge connecting the visitor center to a new parking area built into the hillside above the distillery.

Bruichladdich has steadily increased production since the new owners took over in 2012 and they reached 1 million LPA in 2017. The distillery has since been adding warehouses to keep up with the increased production levels. They have also talked in the past of their desire to add a traditional malting floor, at least for their Islay grown barley. And they could always revive the Port Charlotte distillery project rather than expanding Bruichladdich.

While production levels at Bunnahabhain have steadily increased over the last 10 years, I’m not sure if they have yet reached the capacity of their four stills, which is 2.74 million LPA. There are no plans to increase capacity, but in July of 2017 the distillery announced that there would be an £11 million investment over the course of three years to improve infrastructure, upgrade buildings and make cosmetic improvements. All of this is aimed at creating a more appealing experience for visitors to Bunnahabhain.
 

Neither Lagavulin, with a capacity of 2.4 million LPA, nor Bowmore, with a capacity of 2 million LPA, have announced or even hinted at plans for expansion. Of course, most companies stay pretty tight-lipped about such projects until they are ready to seek planning permission or they are looking for feedback from the public ahead of that move. So the latest news of a planned distillery expansion could come at any time.