Ian Buxton

Comment - Spirits - Small is Beautiful

By | 23 August 2012

In his latest column, Ian Buxton profiles a new spirits distiller in the UK and considers what this could mean for the craft spirits category of the futue.

A new distillery starts working in London next month. Within a few weeks it will be making gin and whisky - the first whisky made in London (legally, at least) for more than 100 years.

However the London Distillery Company, as it is imaginatively named, is tiny. Petite. Miniscule. Its volumes will be scarcely measurable. No-one at Diageo, Pernod Ricard or William Grant & Sons is having sleepless nights trying to devise competitive strategies to see off the threat of this tiddler. In fact, they probably haven’t even noticed its modest operation in the south-west of the capital.

So, why write about it at all?

Paradoxically, precisely because it is so small. Its size is the really interesting thing about the London Distillery Company. Their gin still is 160 litres in size and the whisky still is 650 litres.

So what? Well, as any fule kno, HM Revenue & Customs (HMRC) will not licence a still of less than 1,800 litres in size - the old 400 gallons rule. Except it turns out it’s not a rule at all.

For many years it had been the established and understood position that the minimum acceptable still size in the UK was 400 gallons (1,818.44 litres), the reasoning being that any still smaller than this would be too easy to conceal, remove and transport thus facilitating illegal distilling. The legislation had been consolidated over many years, dating back certainly to the 1823 Excise Act and extensively revised and amended since then. Custom and practice (and quite possibly the convenience of Customs & Excise) had combined to create a situation in which the 1,800-litre limit was taken as fixed and given by all concerned. After all, an industry increasingly controlled by multi-national corporations concerned more with large-scale production might be said to benefit from the perceived barrier to entry presented by this size limit.

Enter Darren Rook of the London Distillery Co and his drinking companion Alan Powell, a former HMRC official turned consultant who actually formulated and simplified much of the relevant policy while still employed by the Government. He encountered Rook over a dram at the Scotch Malt Whisky Society’s lounge in London, where he heard of the plan to create an artisanal London distillery – and the formidable obstacle of the legislation on still size. Not only would a still of this size produce more spirit than Rook required, it would take up more space and cost far more money than he had available.

“There is no problem,” cried Powell (or words to that effect), pointing out that the relevant legislation doesn’t proscribe any particular size of still; in fact, on the contrary, it appears that you can apply to operate any size of still your heart desires and unless HMRC can come up with a reasonable objection they are obliged to grant permission.

In other words, if you are properly financed, have a decent business plan and don’t have a criminal record, get your application in now. The legal basis for granting a distilling licence is “to protect the revenue” and HMRC are required to act reasonably in applying their judgement. Furthermore, since 1995 it has been the case that HMRC’s decisions can be appealed at a First-tier Tax Tribunal, which is a considerably less onerous, time-consuming and expensive procedure than the previous system of judicial review through the courts.

The significance of all this is that it opens the doors to a resurgence of craft distilling. Once again, every farmer could contemplate malting and distilling his own barley, raising the prospect of farmhouse distilleries across the length and breadth of the land; London gin could flourish once again in the city of its birth (and we all know what gin did for London’s reputation); fruit farmers could tell those pesky multiples to ‘bogoff’ and start making profitable raspberry eau-de-vie – the possibilities seem almost endless.

Our Continental cousins have maintained their small-scale distilling traditions for generations; over 400 entrepreneurial craft distillers in the US show us it’s possible. This could be the decade that artisanal distillers make a comeback in the UK.

After all, Diageo, Pernod, William Grant? They all started somewhere.

Sectors: Spirits

Companies: Diageo, Pernod, William Grant, Ricard

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