The owner of a small distillery in Co Waterford has said the company’s future in its current premises is “not sustainable” due to the rising supply chain costs and energy crisis.
Blackwater Distillery, which is known primarily for its gin and whiskey, is based in the “middle of nowhere”, according to its chief executive, Peter Mulryan, making the business “quite exposed” to the increased energy prices.
The company’s energy bills are up about 60 per cent, he said, while the price of glass and cardboard are up about 40 per cent. Transport has also increased significantly, Mr Mulryan said.
The owner said they have done “whatever we can to try and mitigate the costs”, but making whiskey is a “Victorian enterprise” that involves “boiling thousands and thousands of litres of alcohol”.
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‘Where we are physically here, there’s nothing we can do with renewables. We’ve tried everything. We’re just stuck, really’
“There’s no other way to make it. It’s just how you generate that electricity, how you get that energy, is the only way you can mitigate that. Where we are physically here, there’s nothing we can do with renewables. We’ve tried everything. We’re just stuck, really,” he added.
The company hired consultants to see if there were ways in which they could cut back on costs or move away from fossil fuels.
“It became clear that we can’t do much on the site here. We can’t get gas here. We’re not big enough to put any solar [panels] on the roof. We’ve looked at all the potential ways, and there’s no other way of running this building except on oil and electricity.”
Small suppliers haven’t got the economy to scale, meaning their product is already at a higher price point, he added.
‘Isn’t sustainable’
“There comes a point where you could price yourself out of the market. When you’re supplying to supermarkets, they have price points beyond which the product won’t sell,” he said.
The only way to ensure viability is to put forward plans to move to a much larger facility, he said, but which will cost around €15 million.
“That’s something we had thought about doing over the next few years, but we’ve pulled that plan forward to right now, actually, to see if we can move. Here just isn’t going to be sustainable if things keep going on the way they are at the moment. We’re kind of stuffed, really,” he added.
William Lavelle, director of the Irish whiskey Association, said producers are reporting more cost and viability challenges in the past three months than ever before in his career.
‘The cost of distilling has gone up, the cost of labels, the cost of stoppers, the cost of barrels. Everything’
“There has been a substantial impact on the supply chain; prices have gone up on everything. It’s not simply the energy bill; inputs are an even bigger challenge,” he said.
“The price of malt has doubled this year. That’s the biggest ingredient in whiskey. It’s putting massive pressure. Glass bottles are up 30 to 40 per cent. Then you also have transport. So, the cost of distilling has gone up, the cost of labels, the cost of stoppers, the cost of barrels. Everything.”
Mr Lavelle said that “for the first time” he was hearing about companies having to redo their business plans. One of the difficulties, he said, was that whiskey being distilled now won’t be sold for a number of years.
“It’s very hard to be putting up prices in a cost-of-living crisis. And it’s very hard to predict if you’re burying costs,” he added.
In an effort to help businesses, the Government introduced the temporary business energy support scheme (TBESS). Under this, qualifying businesses will be provided with up to 40 per cent of the increase in electricity or gas bills up to €10,000 per month.
