Every new business has to jump through many hurdles just to get off the ground, only to find themselves battling many more to keep going. Unfortunately the whisky industry is not exempt from such problems, and the recent saga involving one of London’s newest distilleries highlights some of these hardships.
Founded in 2014, the East London Liquor Company produce a variety of spirits at their London distillery, including both single malt and rye whisky, as well as vodka, rum and a range of gins.
Recently the ELLC had fallen into administration following sudden changes to HMRC’s Time to Pay agreement. This scheme allows businesses to pay owed tax over monthly instalments. However, new terms were introduced “out of the blue” according to company founder Alex Wolpert, and the new conditions were ultimately “untenable and unviable” to continue operating the business in its current form.
After "tireless" negotiations with HMRC failed to find a resolution, ELLC were placed into administration earlier this week.
Fortunately, Wolpert was quickly able to file the appropriate paperwork and successfully buy the business out of administration, thanks to the support of partners and shareholders. Interestingly, Wolpert and the ELLC have always had a degree of public backing. Two previous crowdfunding campaigns in 2018 and 2021 raised over £2 million between them.
Looking to the future, there’s a desire to keep much of the same ethos that the East London Liquor Company was founded with. Having Alex Wolpert at the helm gives a degree of continuity for the distillery and the brand, but they admit that they have to make “uncomfortable choices in order to survive the current climate”.
Indeed, the current climate is presenting many challenges for everyone. We can speculate about the specifics that led to ELLC’s situation, but there are a number of tough truths shared throughout the whisky industry.
In a previous article we discussed how various studies highlighted a decline in spirits sales for both on and off trade. For example, one piece of research noted how 40% of respondents from a pool of 280 small distillers had noticed a decline in sales compared to the previous year.
The secondary market is also experiencing a slump. Although there’s been some notable record breaking, headline grabbing sales recently, particularly in the ‘super premium’ category, there’s been a noteworthy downturn in final hammer prices for whiskies across all categories, including bottles that had previously been big money spinners.
In short, consumers are spending less. Everyone’s skint. We’re being more selective about what and how much we buy. And unfortunately that doesn’t look to be changing any time soon.
Producers are also facing their own challenges. Ask anyone within the industry about areas such as glass bottles or other packaging and you’ll likely be met with a long, sad tale of sky high prices and constantly shifting lead times for deliveries. Additionally there’s the usual business costs such as rent, maintenance, staff - and that’s without mentioning the desire to reinvest and develop the brand.
When you combine these spiralling costs with decreased sales, you can understand why there might be an air of trepidation within the industry. Sadly these hardships disproportionally affect smaller, independent businesses and distilleries.
Another challenge unique to younger distilleries is the possibility of consumer fatigue. Over the past 10-15 years there has been a plethora of new distilleries selling their wares. There’s the possibility that it’s harder for these companies to make a big splash with new releases when customers are faced with a flood of youthful spirit in the market.
ELLC potentially faced the additional challenge of being a new English whisky. While that area of the market is certainly growing in both size and reputation, English whisky is nowhere near as established a product as Scotch, bourbon or Irish whiskies are. So while those within or adjacent to the industry may be more open minded, Jonny Know-nothing on the street might still view English whisky as something weird, alien or even blasphemous.
However, that is purely speculation. The idealist within me hopes that more new whisky, wherever it may come from, is an inherently good and exciting thing. It paints a positive picture in one’s head of a thriving industry in full bloom. Unfortunately, as the situation ELLC faced has shown, the economic reality is much harsher.