SMWS owner grows 2023 revenue

The Artisanal Spirits Company (ASC), which owns the Scotch Malt Whisky Society (SMWS), saw 8% revenue growth in its financial results for the year ending 31 December 2023 (FY23).

Revenue reached £23.5 million (US$29.7m), with gross margin rising to 63.8%, from 63.6% in FY22. Gross profit delivery increased by 9% to £15m ($18.9m).

Earnings before interest, tax, depreciation and amortisation (EBITDA) showed a loss of £500,000 ($US631,215), although adjusted EBITDA, which excludes non-recurring costs, was £100,000 (US$126,272).

Speaking to The Spirits Business, Billy McCarter, CFO of ASC, explained these costs were predominately due to the changes within the executive and senior management teams, including the appointment of CEO Andrew Dane to replace David Ridley, as well as costs incurred in the acquisition of Single Cask Nation (SCN).

The company said the board was confident ‘in the ability of the business to deliver more substantial EBITDA in 2024’.

ASC had a loss before tax of £3.6m (US$4.5m), which the company said was due to interest and depreciation of its new supply chain facility, Masterton Bond, which is now fully operational.

Although there was growth in revenue, gross profit and membership, ASC said the results were ‘not at the level we had targeted for the year’.

Dane explained: “We delivered a year of growth against a challenging backdrop. That reflects our unique model, where we saw double-digit growth in our membership for the SMWS. That model delivers a high margin.

“In our trading update in December, we pared our growth and essentially delayed our growth trajectory by a year, in terms of revenue growth and path to profitability. So, while we did grow, it wasn’t quite at the level that we targeted at the start of the year. We’re pleased to see that the full-year results were marginally ahead of the guidance we gave in December.

“What is particularly pleasing for me was the acceleration of revenue growth in the year – it was 8% for the full year, but 12% in the second half of the year (H2), with some particularly pleasing performances last year from places like Europe.”

FY24 has started positively, with ‘revenue performing in line with expectation’, representing 10% growth on FY23.

Cask values

The market growth of the company’s cask inventory has also grown, with cask sales during FY23 at 4.5 times net book value. Cask sales contributed £2.7m (US$3.41m) of revenue, which the company said offset ‘a challenging period of trading in China’.

ASC revealed it has a cask stock holding of £25.3m ($US32m), which has a notional retail value of around £500m (US$631m).

Dane said that this value was a particular success in his eyes: “It’s a substantial asset backing to the business.”

Single Cask Nation

Dane cited ASC’s acquisition of SCN, a US-based independent bottler, which occurred after the results period, as an indicator of future growth and part of its ambitions to increase its presence in the US.

“This acquisition is a strong strategic development and is both complementary and incremental to SMWS in the significant and growing US whisky market,” he said.

“We remain confident in this US market opportunity, with the very strong finish to 2023 for in-market depletions for SMWS, continuing with double-digit growth in early 2024.”

SCN will remain a distinct business from SMWS and will continue to focus on American whiskey.

“It has had a really good start – we acquired it in January and had our first sales in February,” Dane continued. “It had its first US e-commerce launch in March, with 50% selling out in the first day. It also won the Independent Bottler of the Year award at the Icons of Whisky Awards, which is a big accolade and a good reflection of what Jason [Johnstone-Yellin] and Joshua [Hatton], the two founders, have achieved.”

The US is SCN’s largest market, but it also has distribution in Europe, the UK, Canada, Germany and Japan. “We are looking to expand distribution but we also want to leverage those relationships for JG Thompson, which doesn’t export to Canada or Japan, for example,” said Dane.

SMWS

ASC revealed the SMWS had surpassed 41,000 members at year-end, up by 10% from 2022. It cited the US and mainland Europe as particular areas of growth (up by 17% and 29% respectively) and highlighted its entry into new Asian markets.

The brand established a subsidiary in Taiwan in August 2023.

It said membership retention remained ‘close’ to its all-time high of 74%, with annual contributions per member at around £300 (US$379). Although this was down on 2022’s figure (£326/US$412), lifetime value per member was up by 25% since its initial public offering.

SMWS celebrated its 40th anniversary last year, with events and activations to celebrate. “We can’t pretend that it’s the 41st anniversary and do it all again,” explained Dane. “This year needs to be different. But our focus on the core of the business is what makes every bottling of society liquid special.”

For this year, one big initiative for SMWS will be Scotch and Sherry. “We’re hoping to capture the trend that’s been happening over years and that we’ve been building towards, which is the consumer demand for ex-Sherry cask influenced whisky.”

In his statement, Dane described the SMWS as ‘the core of the group’.

He continued: “I would like to extend my thanks and recognition to all the fantastic employees within ASC for the hard work and commitment displayed during the year – their resilience, innovation and delivery of outstanding experiences for our members continuing to reach new heights.”