SMWS owner posts 34% FY sales drop in China
The Artisanal Spirits Company (ASC), owner of the Scotch Malt Whisky Society (SMWS), reported stagnant full-year sales as revenue in China fell by a third.
The ASC saw revenue for 2024 rise slightly by 0.4% to £23.6 million (US$30.5m), up from £23.5m (US$30.4m) in 2023.
The group noted that its earnings before interest, taxes, depreciation, and amortisation (EBITDA) rose significantly to £1.1m (US$1.4m) in 2024. It marked the group’s first positive EBITDA since its initial public offering (IPO) in 2021.
Andrew Dane, CEO of ASC, said: “Our ambition remains to create a high-quality, highly profitable and cash-generative, premium global business and we made good progress on achieving this during FY24, despite a backdrop of uncertain economic conditions in some markets.”
Dane told The Spirits Business that while growth was “reasonably low”, the company managed to achieve “good revenue diversification” by expanding into other markets.
“To have delivered any revenue growth this year, I think, was quite a creditable performance in the conditions,” he explained.
The firm’s total revenue for the first half of the year was “down one and a bit percent” while the last six months of 2024 was up by 2%, Dane said.
‘Challenging’ China
Sales in the Asia region saw another a year of decline, plunging by 20% in 2024.
China represents the largest market in Asia for ASC, with sales plummeting by 34% to £2.4m (US$3.1m) last year, due to ‘economic headwinds’.
Meanwhile, Taiwan’s 150% sales increase last year helped to offset ‘challenging conditions’ in China and Japan, which was down by approximately 30%.
The company noted: “In our internal forecasts we have assumed no material recovery in the China economy over the next two to three years, which will hopefully represent a relatively prudent assumption for medium term growth in the market.”
Two years ago, China represented 25% of the group’s business, but is now sitting at a 10% share for 2024.
Speaking about China’s performance, Dane noted that membership has risen in the market, growing by nearly a quarter in 2024.
He added: “We’ve been building a broader base of consumers in China that allows us to be well placed if conditions start to improve.”
The CEO noted that the company is “not reliant on any improvements [in China] to deliver our results” as the business has diversified. “We haven’t baked into our forecasts any substantial upside in China,” Dane explained.
The SMWS America business also struggled, reporting a 12% revenue loss in 2024.
The group’s largest region, Europe, on the other hand, saw growth of 7.6%.
Dane cited that the company’s full-year performance was driven by growth in new markets, like Taiwan and Korea, and led by US-based independent bottler Single Cask Nation, which ASC acquired at the start of 2024.
In January 2025, ASC completed its £500,000 (US$634,500) investment in the SMWS America business, enabling the firm to have full control of membership and marketing.
Dane noted: “We have delivered profitable growth, helped by our successful acquisition of US-based Single Cask Nation in January 2024 and the additional investment in our SMWS USA operations completed in January 2025 also further augments the exciting opportunity for ASC to deliver profitable growth in this key market.”
Tariff concerns
The company also addressed the current tariff situation in the US, noting that the business would take steps, if needed, to “minimise any potential impact through management of our US stockholding, the optimal route to market, and our ability to utilise a greater percentage of US whiskey”.
Dane said: “Of course, the cloud of tariffs is hanging over every kind of business and market at the moment, however, it’s worth noting that for us, there are no current specific tariffs being threatened or discussed.
“So at the moment, we’re in that space where we are prepared for and we’re ready with mitigating actions to offset the impact of any of those.
“My view is that if, for example, the historical import tariff of 25% on Scotch, if that were to be reapplied, we could mitigate 75% or 80% of the impact of that, meaning it was a few US$100,000 impact at the bottom line for us. That’s obviously something we would like to avoid, but it wouldn’t be catastrophic in any way for the business.”
He also noted that the company had been growing its domestic US presence through Single Cask Nation, which would “further mitigate the impact of any import tax”.
Market opportunities
The group noted that Vietnam was its next target market for international expansion. Dane notes that this market will be “coming live imminently”.
As for future markets, he points to Nigeria as having “very fast growth rates”. He explains: “It’s not a market we’ve been in so we’ll take a while to make sure we get right partners and understanding opportunities.”
He also highlighted India as a “huge market with fast growth”, but added: “It’s really the regulatory environment that we’re waiting for there, and sort of taking steps to explore partnerships and models that could apply, but really a change in tariffs would be the trigger for acting in that market.”
ASC also noted that the value of its cask inventory is at just over £100m (US$129m) – based on an independent cask spirit valuation – representing approximately four times its current net book value (NBV) of cask spirit and net debt.
Membership booms in Asia
ASC also noted that SMWS’ global membership grew by 4% to 42,700, up from 41,000 in 2023.
Membership in Europe rose by 6% to 27,400 people, driven by 10% growth in the UK
The Asia region saw membership figures rise by 12% to 5,500, driven by China (up by 24%) and Korea (up by 59%).
The Americas suffered a 4% drop in membership numbers, from 8,300 in 2023 to 8,000 in 2024.
The company said SMWS would continue to develop private cask sales for new and existing members as a ‘strategic priority’.
Q1 growth and meeting future demand
The CEO also highlighted a “positive start” to 2025 with double-digit growth in the first quarter, compared to the same period last year.
ASC said revenue growth was led by bottle sales in Europe, supported by the new Creators Collection range, as well as ‘early success on delivering against full-year cask sales targets’.
Dane also provided an update on the company’s progress since the IPO.
He noted that both revenue and SMWS membership have each grown by 57% since 2020, following the IPO.
“From a strategic investment perspective, we have successfully deployed the £15m (US$19.4m) of new equity raised on IPO,” he added.
“This, together with debt, has been primarily used to fund the £14m (US$18.1m) investment in spirit between 2021 and 2024, and a further £3m (US$3.8m) on cask wood during the same period.
“Following this significant investment in the cask inventory, we now hold all spirit required to meet demand through to the next decade.”
Dane noted that company has now transitioned to only buying stock on a replenishment basis.
He continued: “As a result, the cash profile of the group is improving; and we believe that net debt has peaked, as we transition from material net cash investments in stock to a replenishment approach.”
The funding from the IPO has also helped the firm to complete a £2.5m investment in its Masterton Bond supply chain facility, which has produced more than 335,000 bottles and has 2,300 casks in storage. The move has helped to cut third-party costs.
Related news
Amber Lane creates ‘world-first’ Chartreuse whisky
