Tasmanian craft distiller Sullivans Cove sold
Call that a business plan? Australia's most decorated whisky brand, Sullivans Cove, was sold in December 2016 for an undisclosed sum with the owners admitting that they had underestimated the demands for capital needed to grow the business and therefore chose an exit.
Who are they fooling? Themselves or consumers? As – nearly – everybody knows, whisky distilling is a case of “if you want to make a small fortune, throw a large one at it.” Before you can even start selling your whisky you need to build up inventory for years. So every budding distiller has to be prepared to spend big money without seeing any returns. And even when the whisky is ready to sell you need more capital to keep up with projected demand. In this respect, investors will see returns on their investment after decades rather than years.
Sullivan’s Cove is Australia’s leading malt whisky. It was founded 14 years ago by an investor group led by distiller Patrick Maguire, who will remain with the distillery under its new ownership.
The new custodians are a family-operated group led by Adam Sable as Managing Director. A Melburnian, Mr Sable began his professional life as a commercial lawyer, following his passion into the Scotch whisky industry. Most recently he was General Manager of Bladnoch, the lowland distillery acquired by Australian David Prior in 2015.
Sullivans Cove created waves when it won best single malt at the 2014 World Whisky Awards.
Mr Maguire explained: “The business had grown rapidly over the last couple of years and there’s been a lot of money spent on increasing the amount of new make whisky we were producing.
“All we could do was drive it on cash flow. The bigger it gets, the more cash flow you need and there's only so many barrels that we had to draw the cash flow from. We thought the sensible thing to do was to look seriously at some of the people interested in the business, and choose some people that we thought could really take it forward and put the right sort of money into it.”
The Tasmanian whisky industry is booming. Ten years ago there were only three distillers on the island, now there are 22, and sales are growing.
Perhaps Mr Maguire took the opportunity to sell the business at a time when demand for craft whisky is booming? The sale of Sullivans Cove was the second major deal involving an Australian distillery in late 2016. In October, Australian Whisky Holdings acquired Nant Distilling Company from founder Keith Batt. Mr Batt was forced to file for personal bankruptcy in February 2016 after buyers of stakes in Nant’s barrels claimed they were unable to redeem their investments, it was reported. The new owner, a private equity firm, also controls stakes in the Lark, Overeem, and Redlands distilleries in Tasmania.
In December 2016, Rémy Cointreau acquired Seattle’s Westland Distillery and Pernod Ricard bought a majority stake in West Virginia’s Smooth Ambler Spirits.
