Authors: Dafydd Jones and Lewis Sharpe
Producing the first commercially available whisky made in Wales since the 19th century, Penderyn has certainly contributed to putting Wales on the map.
Launched in 2004, Penderyn has since grown in popularity, selling internationally to markets such as Taiwan, Australia and the USA.
Co-founder Brian Morgan gives a fascinating insight into the history of whisky in Wales, the idea behind Penderyn and executing a plan for a recognisable Welsh whisky.
The History of the Welsh Whisky Industry
Despite Penderyn’s reputation as Wales’ first available whisky made in Wales since the 19th century, Morgan explains there used to be a strong whisky industry in Wales.
“In the 19th century, we had quite a big whisky industry in Wales and people like Evan Williams, who started up the bourbon industry in America and Jack Daniels, who started up the dry whisky industry in America as well, those guys were all Welsh. They were distilling in Wales before they went over there.
“The reason they stopped distilling in Wales is because there were huge taxes on whisky brought down from the UK, from the English Government. There were big taxes on whisky and we couldn’t compete. So these guys went abroad and started up companies abroad.
“The last company to produce whisky in Wales was called the Welsh Whisky Company and it was operated in Frongoch in Bala. It was struggling and closed its doors in 1896. The reason it died a death as it were, was that the guy in charge of the distillery, the owner of the distillery, in those days, whisky was produced to a recipe. It wasn’t like it is today, where whisky is malted barley distilled in a special way, and then matured for three plus years. It was nothing like that, it wasn’t organised industry in that sense, you just produced whisky. It was basically a recipe, you produced alcohol and added various things to it. He had the recipe and got killed in an accident, they didn’t have the recipe to continue the whisky.
“That last distillery closed in 1896. That’s an example of you can take it with you because that was the end of that company because that guy was the only guy who knew how to produce that particular whisky. They hid their own version of the whisky because it was a commercially confidential piece of information. These people were already there, we did have a whisky industry.
“Why did the Scots and Irish continue? It turns out, the Scots and Irish continued because the Scots moved the whisky up into the highlands away from the tax man, and the Irish said get out of here and didn’t pay any taxes and that was how they continued. But the Welsh and the English as well, they all went by the wayside because they couldn’t afford to keep going because of the high taxes that were brought in on alcohol. So the whisky industry petered out in Wales.”
The idea behind Penderyn
Morgan, formerly a Chief Economist for the Welsh Development Agency, recalls the day that the idea of re-starting the whisky industry in Wales was produced.
“It sort of began, for me anyway, when I was running an economics seminar up in Builth Wells, around 1998, and at the time, the Welsh assembly was just about due to come into existence. We had the referendum and therefore, we were going to have the assembly. This big event in Builth Wells, I had organised because I was the Chief Economist, just stepping down at the time for the Welsh Development Agency. I organised this big event to discuss economic strategy that would be needed by the assembly, to change the way we did things in Wales and move us up the prosperity league.
“It went very well, we talked about the usual stuff, but then somebody, funnily enough, the lady who’s now my partner, said the problem with Wales is that when we go to promote Wales abroad in big events, we get overshadowed by the Scots and the Irish, who’ve got their big whisky companies, who sponsor them. We’re there like the poor relations. What we need in Wales if we were going to make a difference is bigger companies that can come and sponsor our events and can put Wales on the map.
“We thought at this seminar one of the ways that we could regenerate the Welsh economy was to perhaps restart the whisky industry in Wales. So, funnily enough, the very next week, a good friend of mine came to see me and said he’d been talking to people about restarting the whisky industry in Wales and that was in 1998. He said what we want you to do is write us a business plan and raise some money and that’s what I did. I wrote a business plan in 1998 and rose some money and we started it off, we built the distillery and commissioned the still in the year 2000.”
Executing the Plan
Having made a detailed business plan, Brian Morgan explains the steps of the bringing Penderyn into fruition.
“First of all, we had to raise the money. I sat down and it was really sort of back of the envelope stuff and I had an excel spreadsheet at that time, which was something. It was pretty basic. I said if we think about it, what we need, building the distillery, commissioning the still, buying the barrels, setting up a bottling line, I think we’re gonna need at least a million pounds. So, I went about raising a million pounds effectively.
“The three guys who were involved initially, we put in £50,000 each, so that was £150,000 to buy basic, initial stuff to kick the thing off. Then we raised another £200,000 from other shareholders, so we started off with about £350,000 of shareholder capital. We then raised £300,000 with HSBC Bank who were very helpful, so raised £300,000 mortgage from HSBC for the distillery and we were given just over £300,000 from the Welsh Development Agency as a start-up grant, that’s where the million came from.
“We then thought we’ve got the basics now, we’ll go out and build the distillery. We first needed the land. We knew the land in Penderyn was ideal for a distillery, because it sat on top of a massive lake, so there was an underground lake, 100-200 foot beneath the ground, a massive lake that was perfect mountain, mineral water. Water is one of the basic ingredients of whisky, an important ingredient.
“We wanted to buy this plot of land and it was owned by Carlsberg. We went to Carlsberg and made them an offer of £75,000 to buy the land and build the distillery. They turned us down and said they wanted more money for it and said they were putting it up for auction. So they put it up for auction in the Park Hotel in Cardiff. We went to the auction and bought it for £50,000. So we were lucky that nobody else was there on the day and we just bought it for £50,000, we thought it was brilliant.
Having raised sufficient funds and acquired the land for the distillery, Morgan explains the process of gaining commission of a still.
“There was a still being developed with European money that was different to Scottish and Irish because those processes are very energy intensive and very energy inefficient.
“The way the Scots do it is they have two stills. They heat up the first still and that has the beer wash, the malted barley in it. As the distillate comes off, they have to have a cooler on the top that turns that distillate into liquid and they put that in a second still. So then they heat up the second still, that distillate is about 30% alcohol, they heat it up again until it becomes 70% alcohol and that’s what you heat up in the barrel. It is a double process, but it’s very inefficient, because you heat something up, cool it down, heat it up again and cool it down.
“The European Commission thought there must be a simpler way to do it, so we had a still that was being developed as an energy-efficient still that had one process. So, instead of heating it up and cooling it down, heating it up and cooling it down, it just heated it up and kept heating it up and kept heating it up and all the good stuff, if it didn’t distillate at the first time around, fell back into the pot and was then heated up again. That’s the process they use on the chemical industry, we adopted that process.
“The guy concerned, who had invented the process, who knew it would work, was called Dr David Faraday. He was a professor at Surrey University. He was an expert and said this is the best still you can get, it’s the type of still they use in the chemical industry, it’s highly efficient, don’t need to double-distillate.
“But, he said he had no idea how to make whisky, just that this still is a very efficient way of turning something into alcohol, could be ethanol, methanol, any form of alcohol. He worked with us to produce the still with a European grant of £600,000 to produce this efficient still, which is what we did. We produced an efficient still and that was a basic building block, a good still, the water and a good source of malted barley, which we got from Brain’s Brewery.”
The uniqueness of Penderyn
In terms of whisky reputations all over the globe, Wales are in competition with the likes of Scotland, Ireland, the USA and Japan.
Co-founder Brian Morgan details what Penderyn whisky different.
‘’We were very conscious that we didn’t want to have the best Scotch made in Wales, that was not a good marketing ploy. We thought obviously we have to differentiate ourselves from the Scots and the Irish.
“So, the still is the main ingredient really. The whisky comes off the still at 92 percent ABV (alcohol by volume). The Scottish way of producing whisky, even after two distillations, comes off at about 75 percent ABV and the Irish, who do it a third time, they take it up to about 80 percent.
“But, ours is much purer because of the efficient way it’s produced so it’s a smoother whisky even when it comes off the still. It comes off the still at 92 percent ABV, full of flavour because this is one still that is always in touch with the malted barley whereas the Scots go from the first still, which has got the malted barley, to a second still, they heat that up and get more alcohol out of it but they haven’t got the same amount of flavour going into it and it ends up at 70-75 percent.
“So, ours is different because it’s smoother than other whiskeys. It’s also flavourful. The Scots do it twice, the Irish do it three times. So our whisky is very, very tasty in the sense of you can taste and smell, you put a glass to your nose and you can smell the barley straight away, when it comes off the still and after it’s been distilled for 5 years.
“Full of flavour but, when you drink it, it’s very smooth so you’re not choking back even when it’s neat. You can drink our whisky neat, straight from the bottle, you can drink it and it’s smooth. Of course, you can add a little bit of water to it, and we recommend adding a third of what you have of the whisky in water to it and that will bring out different noses, it’ll change the whisky a little bit and you’ll end up with a slightly interesting whisky to taste but you can drink ours completely neat and it doesn’t burn your throat.
“So, it’s flavourful, very smooth and that is what makes it very popular. Because it is smooth and flavourful, it appeals to people who like that sort of whisky. So anyone who says that like Laphroaig or Talisker, those highland whiskeys, very medicinal smelling and very rough on the throat, they’re not going to like Penderyn.
“Very rarely do people who like peated, strong whiskeys like Penderyn. But if you like Speyside whisky like The Macallan or Glenmorangie then, of course, Penderyn competes very well with those because it’s smoother.
A wealth of products
Not only does Penderyn specialise in whisky, with other products such as Merlyn Cream Liqueur, Five Vodka and Brecon Gin all now recognised in the industry.
Morgan explains that expanding the business with a range of products was always the intention, but it didn’t have instant success.
‘’That was the original idea straight away. Why? Because you’ve got to lay down whisky for so long with no cash flow coming in so we thought how are we going to survive for five years without any cash flow. Of course, if you can produce vodka, gin and Merlyn to some extent, they don’t need to be laid down in any way.
“You manufacture vodka and gin and you virtually sell them in a couple of weeks, so they’re very good for cash flow. We thought, there’s no actual competitor out there for Welsh gin and vodka. In 1998, when we thought of the idea, there was no vodka and gin on the market that had a Welsh name on it so we thought to produce a Welsh gin, market it, produce a Welsh vodka, market it and it’ll sell off the shelves in Tesco and everywhere else because it’s Welsh.
“That was a mistake. Those bottles of gin and vodka, we spent some time designing a nice bottle, it was a square bottle when it started off, see-through bottle that’s completely transparent and the label had Brecon Gin on it and the back of the label, which you could see through the bottle, had a big picture of the Brecon Beacons.
“Brecon Vodka, Brecon Gin with photographs on the back and we thought they would fly off the shelves. In fact, they didn’t fly off the shelves. We had great difficulty selling them and Tesco immediately brought out their own version of our gin and vodka looking almost exactly the same as ours, only with different photographs on the other side, right next to ours and they were a pound cheaper so we learned the hard way not to trust the big grocers.
“Our Merlyn has our whisky spirit in it, when it comes off the still, before it gets matured, and we put that with cream to form Merlyn and that’s the only one on the market that has whisky in it. If you look at the label on Baileys, the word whisky isn’t mentioned anywhere, it’s just pure grain alcohol with sugar and cream.
“We knew we had a winning product here so we went straight into again and we hit the market in Christmas time 2001 with a nice Merlyn bottle, good quality whisky and cream liqueur. Baileys immediately came out in Wales selling two bottles of their Baileys for just a bit more than our one bottle of Merlyn. They immediately saw the threat and came in to crush us straight away.
“Luckily for us, we weren’t completely dependant on selling that. We didn’t sell very much of the Merlyn, gin or vodka, they just helped us learn the trade about getting into the big supermarkets and getting on the shelf.”
Plans for expansion
Penderyn announced plans in May last year to open a new distillery in Llandudno.
Morgan believes the exciting plans will be another step in the right direction for the business.
‘’People in North Wales have been very supportive of Penderyn and we sell a lot in North Wales. They love the fact we have Welsh on the bottle and on the packaging with the dual-languages. They love all that.
“We’ve been thinking about it for a while, in fact, in 2007 I tried to open a distillery in Portmeirion, North Wales, big visitor centre but it didn’t come off for various reasons. The opportunity then arose for Llandudno and someone pointed out that Portmeirion gets X number of visitors but Llandudno has more overnight bed stays than Cardiff.
“It’s a massive tourist trap, perhaps for older people, but there’s a huge number of people who visit Llandudno and also, because they’re coming in from Liverpool, Manchester and all those big population areas, we thought that opening in Llandudno would allow us to open up the brand to those places and also capture the massive tourist numbers in Llandudno.
“We think, for example, we get about 50,000 visitors per year to our Penderyn distillery but you’ve got to get in a bus, it’ll take up your whole day, lots of effort. Whereas in Llandudno, you’re walking on the high-street and the distillery is two streets away. It’s perfect for all the people in Llandudno who have nothing better to do because, after all, there is nothing to do there.”