Export story: Penderyn Distillery
How exporting is boosting sales for Wales's only whisky distillery
Managing director Stephen Davies explains how Penderyn is reinventing a Celtic tradition and why the export market is key to business growth.
Bringing Welsh whisky back to Wales was the mission of the founders of Penderyn, the first Welsh distillery in over 100 years.
The company, which turned over £3.1m last year, has projected a minimum of £4.5m for 2011. Davies anticipates that 20% of this will come from exporting . “I hope this will grow as I think it's very important for the development of the business that we have a good strong export base.”
The Penderyn distillery is set in the Brecon Beacons national park “We chose Penderyn because there was a natural spring and a good source of clean natural water, very important if you're going to make good whisky,” explains Davies.
Founded in 1999 the company started distilling in 2000, but was faced with the challenge of bringing in finance while the whisky matured. “You can't call it whisky, or sell it until it is a minimum of three years old,” Davies explains. For this reason, the company made the decision to establish three fast production spirit brands under the names Brecon for the vodka and gin products and Merlin for the liquor. This meant the produce could be made and bottled within 24 hours. “The beauty of gin, vodka and liquor is that they are not matured spirits, so you can bottle them the day after you make them. “
Penderyn now exports to 24 countries worldwide, with France providing the best export market for the brand. Davies says: “France has a very strong and quite sophisticated malt whisky market and it is one we expect to grow in quite significantly this year.”
At present just 18% of the business comes from the export market, however driving exports is very much part of Penderyn's strategy, says Davies: “Although the initial export approach was to go with the specialists in each country, what we're now trying to do is have a much more focused strategy to select a key number of markets where we can put resources in and grow brand awareness.”
The regulations surrounding the exporting of alcohol are very strictly controlled, so the company tries to select one party in each country to be both the importer and distributor of the brand (except in the US, where this is prohibited). “We tend to look for one partner in each market and work very closely with them, which is an important choice for us. The success of our business partnership will determine how well we do in the market,” says Davies.
In the UK Penderyn's main customers are the five supermarkets giants: Tesco, Sainsbury's, ASDA, Waitrose and Morrison's. Davies says: “While I still think there is a little bit of growth in UK, I see our export side achieving the real growth, and broadening our portfolio is a key part of our strategy.”
While the company has yet to break the back of the Asian market it has exported to Japan in the past and has recently started exporting to Thailand, and plans to “look towards Korea later this year and China in due course”. It also exports to 31 states in the US – despite Wales not being well-known by the American market. “We are also looking at Canada and South Africa where we have a growing presence”, Davies says.
Another challenge Penderyn has faced is introducing a Welsh product into countries that have never heard of Wales: “Sometimes you feel you are representing Wales as well as malt whisky,” jokes Davies.
One way Penderyn is boosting awareness of its brand is by taking part in shows, events or exhibition throughout the year that “might be whisky related or occasionally Wales related”. The company also uses the British embassy and has undertaken different trade missions in various countries. “We have a schedule of events throughout the year that we use to market the whisky and spirits. We did a St David's day event in Moscow and in New York where the whisky was sampled.
“We try to take advantage of embassies and associated trade bodies as much as we can,” Davies adds.
“I think the countries we tend to do a little better in are the ones that have heard of Wales – countries that have had a lot of Welsh immigration in the past, or some of the rugby playing countries.”