The Unsung Heroes of the Whisky Industry
As WJM announces the launch of its new drinks industry specialist team, Angus MacLeod, Partner and Head of Inverness at WJM, looks at start-ups in the whisky sector and the importance of seeking legal counsel for those looking to move into the market.
Whisky is one of Scotland’s most popular exports, generating £5.5billion towards the nation’s economy, and with the total number of distilleries currently standing at over 130 and more springing up regularly, it’s easy to see why.
This surge in distillery ownership is great news for Scotland’s tourism and food and drink sectors, but this well-regulated industry can be a minefield without the correct legal advice.
From the moment the decision is made to start a distillery, there are several legal factors to consider, including planning, HMRC regulations, health and safety, and crucially - what defines a whisky.
Starting any kind of business can be a daunting process and the regulations that come with whisky distilling in Scotland (and the three-years-and-a-day wait before you are able to sell the product as whisky) makes starting a distillery all the more complex and bound in red tape.
Ensuring a steady cash flow is also crucial and being able to keep the stills going in the long term is an expensive process.
This is why many distilleries turn to gin production, visitor centres, and blends using mature spirit from elsewhere to provide a steady income while the new make spirit is maturing.
Before you even think about beginning the distillation process, there are factors that must be considered such as location, as planning issues must be combatted first, along with health and safety and the purchasing of specialist equipment and how this will be installed.
Employing an architect for a new-build to make sure the building is safe and conforms to regulations along with considering your nearest water source is also crucial.
The water source goes to the provenance of the product, which also feeds into the brand, so having the rights to draw water, and in the volume required, is another important consideration.
These factors all require contracts, which is why having an experienced legal team on your side from the start will make the process as smooth as your favourite dram.
Ensuring that your distillery and warehouses have the correct HMRC approvals is also very important and requires engagement at an early stage.
The next legal step is creating the brand and protecting it with trademarks. Don’t forget it’s not just the name you need to protect.
Parts of this process may be outsourced, such as graphic design, and ensuring you have the correct rights to the design from the get-go will avoid a time sensitive hostage situation.
It is also important to consider geographical indications (GIs) which signify geographical origin.
The term Scotch Whisky is a GI, meaning products which call themselves this must meet strict production and labelling requirements. There are very detailed regulations governing how Scotch whisky and its many variants is produced and described that need to be navigated.
Used correctly, it has potential to enhance your brand reputation, but if you’re not entitled to use the GI or don’t accurately describe your product you could find yourself in legal hot water.
The information contained in this newsletter is for general guidance only and represents our understanding of relevant law and practice as at September 2014. Wright, Johnston & Mackenzie LLP cannot be held responsible for any action taken or not taken in reliance upon the contents. Specific advice should be taken on any individual matter. Transmissions to or from our email system and calls to or from our offices may be monitored and/or recorded for regulatory purposes. Authorised and regulated by the Financial Conduct Authority. Registered office: 302 St Vincent Street, Glasgow, G2 5RZ. A limited liability partnership registered in Scotland, number SO 300336.