By now you will have heard the sad news that Waterford Distillery, located in southern Ireland, has gone into administration. Founder Mark Reynier confirmed the news on social media this week following a report by The Irish Times that the distillery had asked HSBC to appoint receivers.
Waterford Distillery did things differently, focusing on the importance of terroir and sustainability, all the while producing some truly astonishing whiskey. The news of its closure certainly came as a shock to many given the recent growth of the Irish whiskey category. This begs the question, why has Waterford failed to raise more funds to continue operations? And what does its closure mean for the Irish whiskey industry as a whole?
Waterford’s Beginnings & Ethos
Waterford Distillery was founded by Mark Reynier in 2015 on the site of a former Guinness Brewery. At its inception, Reynier had years of industry experience under his belt, having bought and revived Bruichladdich, on Islay, in the early 2000s. Under his leadership, Bruichladdich rebranded and launched the Port Charlotte and Octomore labels. The Islay distillery became known as a dynamic and disrupting single malt that has since garnered a worldwide following.
When Bruichladdich was sold to Rémy Cointreau in 2012, Reynier turned his attention to Irish whiskey, and Waterford was born.
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Waterford Distillery quickly gained traction thanks to its terroir-focused approach that showcased the aptitudes of Irish barley. The concept of terroir is not widely accepted in the whiskey industry. However, Reynier’s past experience in wine selling made him believe that the whiskey was only as good as the barley used to make it.
Additionally, Reynier was always passionate about sustainable whiskey making, singing the praises of organic barley and biodynamic farming. Not only was it better for the environment, it also made the whiskey taste better.
Reynier was never afraid to push the envelope, and the result was an environmentally friendly distillery with a unique approach to whiskey making and some fantastic drams to boot. In fact, earlier this year, Nino Kilgore-Marchetti – whiskey expert and founder of The Whiskey Wash – awarded Waterford Organic Cuvée Gaia a perfect 10 upon review.
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The Finances
The Irish Times, which spoke to Mr. Reynier upon the confirmation of the news, said on Wednesday: “The most recent accounts for Waterford Whisky, filed with its parent company in the UK, show that it had sales of €3 million in 2022, down from €3.3 million the year before. The accounts at the time blamed the €300,000 drop in revenue on its choice of distribution partner in the US. The accounts also showed the company had accumulated losses of €7.7 million, and €40.1 million worth of whiskey stocks.
“Those accounts said that, in January 2023, the company “secured long-term funding for its working capital requirements” through a €45 million facility agreement from HSBC Invoice Finance UK Limited, replacing its existing debt. Accounts for 2023 have yet to be filed.”
In recent weeks, Waterford and HSBC have been attempting to put a turnaround in place, but to no avail.
Another apparent culprit in the closure of Waterford is the high price of barley and energy. Speaking to Just Drinks in May this year, Reynier said: “There’s no denying it, 2023 was a difficult year. It was difficult for us, particularly reorganising our distribution post-Covid.
“I think there are a lot of new whiskies coming onto the marketplace. I see the older well-established distilleries, with a lot of older variants that you’re going to see on the marketplace. But one has to wonder whether, with the barrels, the ageing processes, those whiskies are as good as they could’ve been. Prices going up and up and up.”
Additionally, an explosion in the number of Irish distilleries producing affordable, young expressions meant that Waterford was at a slight disadvantage – the maintenance costs of a single farm, grain-to-glass, biodynamic distillery meant that the brand had to charge a premium for its products.
The secondary market, too, saw an influx of Waterford whiskeys. Whiskey lovers could purchase a bottle at auction for much less than they would pay at retail, meaning that Waterford lost out.
What Does This Mean For The Irish Whiskey Industry?
The Irish whiskey category has been growing at a rapid pace in recent years. In 2022 the value of Irish spirit exports grew to almost €1.5 billion, according to the Irish Spirits Market Report 2022 by Drinks Ireland. The US, in particular, has had a burgeoning appetite for Irish whiskey, with over 5.8 million 9-liter cases exported to the US in 2022 making the US the top market for that year.
However, there have also been many challenges facing the growing industry: Brexit, COVID, transatlantic tariffs, and the war in Ukraine. The latter, in particular, saw the price of raw materials and energy skyrocket across many sectors. Additionally, many Irish whiskey firms ceased exports to Russia, taking a hit on sales. With no sign of this conflict winding down, and additional violence in the Middle East, the global situation is not necessarily conducive to profitable trade.
With over 40 working whiskey distilleries in Ireland – a number that is constantly growing – you have to wonder what Waterford’s closure means for these new producers. If a unique distillery with a sustainable approach and delicious whiskey can go under will some new distillers meet the same fate?
Well, nobody can answer that question for sure, but the global economic situation and the continued rise of duties present nothing but challenges. New whiskey distilleries, which need a constant influx of funds to continue operations until the whiskey is mature and ready to sell, face a long road ahead.
Goodbye Waterford
The loss of Waterford is a heavy one. In a world full of distilleries it truly stood out with its against-the-grain approach. Mark Reynier has always been an innovator. Here’s hoping that he is able to channel his passions into a new project.
Speaking to The Irish Times this week, he said: “It’s tragic news. Anything I’m going to say isn’t going to be adequate to describe my feelings right now. It’s been a great effort from the whole Waterford team. They’ve given great dedication, done a great job. I’m sorry I’ve let them down.”
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