“This is a game we count in generations” – Cotswolds Distillery on building market for English whisky

Set up in 2014, Cotswolds Distillery is one of more than 60 English whisky distillers looking to establish their spirits and so-called New World whisky more firmly on the global whisk(e)y map.

Selling to 35 markets worldwide, Cotswold Distillery produces a range of single malt whiskies, as well as gins and liqueurs.

Founder and executive chairman Daniel Szor is the largest shareholder in the business, followed by UK wine-and-spirits merchant Berry Bros. & Rudd, which took a minority stake in the distillery two years ago.

Szor is also a founding member of the English Whisky Guild and has been involved in the trade body’s application to secure a geographical indication (GI) for English whisky. The move has faced criticism from The Scotch Whisky Association, which said the proposal was “entirely inconsistent with the reputation for single malt whisky”.

Just Drinks sat down with Cotswolds’ Szor to discuss the potential for English and New World whisky, why securing the GI for English whisky is important for the category and the current volatility in global trade.

Daniel Szor: It’s been positive. It’s been slow going, I won’t lie about that. The way I always think about it is that we are where New World wines were in 1976. The so-called Judgment of Paris, that wonderful incident when a bunch of American upstarts from Napa Valley won first, second, third place, at one of France’s most prestigious competitions. It was the shock and horror, and it sort of signalled the start of taking slightly more seriously these wines from the non-traditional wine growing regions. They were still at the time, given that horrible name of New World, which sort of doesn’t really mean anything, but now here we are, 50 years later and, no one really talks about Australia, New Zealand, South American, South African wines as ‘New World’ anymore. They just call them wine. I mean, it’s an Aussie Shiraz, it’s a New Zealand Sauvignon.

I feel very confident that, if you look out that far, the same thing is going to happen to whisky. I hope it’s not 50 years. I mean, we’ve got internet now, we’ve got social media and we’ve got other ways of communicating. We’ve got an audience that will remain very hungry for products that are a little bit more exciting, maybe a little bit more their generation, a little bit new, authentic, small scale. All those sorts of values that will accelerate that process. I don’t think it’s going to be 50 years. I don’t think it’s going to be tomorrow. It might be in five years, 10 years, 20 years, and in whisk(e)y years, that’s not a lot.

I do feel there’s a great increase in awareness of and interest in world whisky. English whisky is a subset of that. Interestingly, we’re not by far the country with the highest concentration of whisk(e)y distilleries outside of the traditional places. There’s over 100 in Tasmania alone. There’s 170 I heard at last count in France… This is mutually beneficial. The more there are, the more the awareness of new, exciting whiskies with interesting flavours. That’s going to play to the advantage of all whiskies and English whisky will have its fair share, I think.

Daniel Szor: It most definitely cannot compete with them, in terms of it’s not going to ever outsell Scotch and it’s not going to outsell Bourbon. But what can happen?

We’re all very impressed with the fact that there’s now 60-plus whisky distilleries, either functioning or in planning, in England. The combined number of leaders from all of them is probably no more than an average size Scottish whisky distiller. That’s not very big.

On the other hand, how much growth would it take in our category to make us all quite happy? It’s not whether we can compete, it’s whether if, literally, one or two percentage points get shaved off of Scotch, for example, in favour of alt[ernative] single malts, that will be enough to help continue to power this category. I think all of us are sanguine about the idea that this is a game that we count in generations.

Daniel Szor: ​​​​​​​We sometimes have an expression here. We say: follow the Brits. What that means is to maybe focus a little bit more than on those countries in which either Brits go to on holiday, or maybe they move to. For example, Australia, good market. New Zealand, good market. Spain, eventually, I think should be a good market… just places where there is a sense of Anglophilia, Anglo interest. British craftsmanship is something that I think is understood around the world – just look at what the word Range Rover has come to mean, for example, the word Barbour in clothing, things like that. We march in this kind of rich tradition of English heritage.

The other thing that really will help to grow English whisky around the world is the whisk(e)y community, the real die-hards, the whisk(e)y geeks, we might call them. We’re lucky to be in a category that has people who are really, truly passionate about the product and at that level. This is not necessarily just a typical supermarket-going person who needs to buy a gift or something like that but people who will go off to whisk(e)y tastings and are really interested in exploring the frontiers of flavour. That’s the logical group that we want to capture internationally.

Daniel Szor: Very small. It’s low-single digits. For me, the issue is not specifically the tariffs in any kind of quantitative sense, not only because it’s a small part of our revenue but also because, let’s face it, we’re not selling our premium products in the way that you would be selling steel, chemicals and oil. It’s not a commodity. There’s some degree of elasticity… I worry just that, at the margin, the consumer… their propensity to go out and spend money on an above-average cost of spirit is going to be dampened – and that’s not just going to be in the States, that’s going to be around the world.

Daniel Szor: Main markets, you’d be talking about, France, Germany, Japan, Australia. Those are some of the larger non-US international markets. Scandinavia.

Daniel Szor: International, and I mean international domestic, as opposed to travel retail.

I think travel retail is another avenue of growth; people are traveling more. If duty-free provides people who are traveling more a perceived saving, then that may well be a good avenue of growth. It certainly has been for us. We’ve gone from almost virtually none of our business in the GTR channel to about 15% of our revenue in just two years.

Daniel Szor: It’s digital, social media, etc. and it’s also liquid-to-lips, as they say in the business, so, it’s tastings. For example, whether that’s at an airport, whether that’s at a shop in Atlanta or Denver or something. One of the big obstacles of premium product is it’s a pretty big commitment to just part with £50 ($67), give or take, on something you don’t know.

I think that we are all about the flavour-to-price ratio. We are not only the largest-selling, English, single malt whisky – even though the numbers are still very small – we have the entry-level that’s the most affordable and approachable pricewise. I think that, in this kind of economy, you’ve got to do that. One of the things that has been a real problem with where whisk(e)y has gone has been over-premiumisation, just asking too much money for not enough change, outside of a flashy new design or a new name or something but not really any substantive change in the process or the flavour.

Daniel Szor: ​​​​​​​I’ve not had any previous experience prior to this distillery in the drinks business and I think most people who were doing English whisky and craft sort of whisky, New World whisky in general, many of them are not born into families of ten generations.

As newcomers, I don’t think anybody’s trying to rewrite the rules of how you communicate with a consumer. This concept of a GI, which has existed for a very, very long time, and is obviously hugely prevalent in wine and in lots of other consumer goods, is something that is generally accepted as a way of providing some degree of confidence to a consumer. It’s all about getting them to try something. If that’s one more lever in the argument to get them to try something because, as a product, you feel that yours is good enough to merit a certain distinction accorded by the government… I mean, obviously it’s worked wonders for Scotch. It’s worked wonders for most… Italian wine, German wine, French wine, etc.

We began this process – it’s not been overnight – it’s been a couple of years. Why is it taking that long? Well, I guess maybe the short answer is because we all have a day job. We’re all trying to keep our own brands going and keep us alive. Also, because it’s really challenging to get a whole group of producers to agree on a common set of standards. Like herding cats, you think you’ve got everybody to agree but then one person thinks it should be different.

We wanted to do things that, on the one hand, encourage or promoted confidence in the quality but also didn’t stifle creativity. We thought that there were certain aspects of, let’s say, looking at the Scotch GI that were unnecessarily restrictive. The big issue at hand currently, which is this very minute, technical issue about where the beer for the whisky is brewed, is actually one of those issues that falls under the issue of creativity and not stifling creativity.

We were also trying not to do something that would impinge on any existing whisk(e)y producers’ way of doing things because that would be contrary to it and with all of this. This whole time, we were sharing our drafts with the Scots, so we were doing this in an absolutely collaborative way.

We didn’t mean this to be the be-all and end-all forever. This is the first step. We believe that the English whisky GI will necessarily evolve over time. It will change. Some things will be maybe added, some things will be taken away. It’s more important just to get it started.