In the whisky category, it would appear that, while the big are getting bigger, the small are getting... more proliferative. This month, Ian Buxton considers the boom in craft distillers and flags up the perils and pitfalls they face.

I’m struck, as I’m sure we all are, by the rapid and substantial expansion of distilling capacity in Scotland. Diageo’s recent announcement of one, or perhaps it will be two, Roseisle-scale distilleries to make single malt follows hot on the heels of Chivas Brothers’ expansion at The Glenlivet and planned re-opening of Glen Keith and the imminent renewal of operations at Tamdhu by Ian Macleod Distillers.

This is all great news and not, in fact, the cause of my worry lines. Paradoxically, it’s the opposite end of the production scale that’s troubling me: the number of projected micro or boutique distilleries that are in the planning or fundraising stage has never been greater.

But, how many craft distilleries can the market support? Already Kilchoman on Islay, Abhainn Dearg on Lewis and Daftmill in Fife are in production. 

You may not have heard of Daftmill. That’s because the owners are in the happy financial position of being able to send their entire new-make spirit to their warehouse to wait until it’s fully mature, without the necessity of selling casks or very young whisky. Would that all such projects were in such a fortunate position.

In fact, the road to boutique whisky heaven is littered with casualties: the Ladybank Company of Distillers, the Blackwood distillery on Shetland and an ambitious plan to combine brewing and distilling on the outskirts of Edinburgh all appear to have hit the buffers. More often than not, ‘investors’ got hurt and bitter feelings ensued.

But where one fails, two new hopefuls spring up. Right now there are plans for a ‘new Rosebank’, near Falkirk (not that they will be able to use that venerable and venerated name); two, or possibly three projects in the Borders; a distillery on Barra; another on Harris; one near Huntly; another at Kingsbarns, by St Andrews; yet another at Lochaber on the Ardnamurchan peninsula and so on. And that’s before considering English whisky projects in London, the Lake District – the list goes on.

Some distinctions should, in fairness, be drawn. Annandale, for example, appears to be fully funded from private financing, construction is well under way on an imaginative restoration and spirit should be running by the end of the year. Lochaber has just received planning permission and various of the others have received grants or support in kind from public sector agencies.

But, funding continues to be a real challenge. Consider the Kingsbarns project: This proposes to convert an attractive but essentially derelict group of redundant farm buildings into a small craft distillery on the Tasmanian model, with the standard food operation and gift shop to serve the tourist trade. According to the promoters, around GBP2m (US$3.1m) is needed (personally, I think they’re being optimistic but I’m not a surveyor so I can safely be ignored).

But, they’ve just passed their third anniversary and construction is no closer to getting started than it was when they optimistically threw a launch party. Though planning permission has been granted and some funds raised, a recent crowd-funding exercise closed short of the target, as a result of which pledged funding cannot be called in.

Despite this setback, the promoters remain optimistic: “It did create a lot of media interest in our proposed distillery and we are now talking to a couple of interested parties willing to take the project on,” they told me.

Sadly, many have failed at precisely this stage. Yet successfully raising the cash and getting started is where the problems, and my worries, really start.

It’s pretty well documented that selling the first bottle (or even cask) from a new craft distillery is, relatively speaking, easy. Or, so far, it has been. But, that’s in a market with just a few, distinctively-positioned small players and a large group of single malt enthusiasts.

Yet, once most of the really compelling brand propositions (England’s first; Scotland’s smallest, etc) have been taken up, the scope for distinctive marketing becomes harder, without factoring in the likely arrival of boutique whiskies from the burgeoning US craft distilling sector that has a vital few years head start. Exactly what’s to distinguish Scotland’s fifth, sixth, seventh and subsequent small craft distiller?

And, that’s not to mention the wood problem. If the projected big distillery expansions go ahead as planned – and there’s every reason to assume that they will – then there’s a very real danger of an industry-wide shortage of quality casks. And, who do you think the bodegas and cooperages will support: their established, credit-worthy, long-term customers or an unknown upstart?

It's not my place to dampen entrepreneurial enthusiasm - indeed, I welcome with open arms the innovation and experimentation that can come from the craft distilling sector. The very best of luck to them.

But, I’ll be keeping my wallet in my pocket for some while yet.