Distilling Ireland’s potential for whiskey and liquor manufacturing…

Our previous government’s 10 year strategy for the Irish Agri Food Sector afforded special interest to Ireland’s growing whiskey and craft beer sector. This is no surprise when In 2014 exports of Irish beverages increased in value to €1.2 billion. This growth is partly driven by Irish whiskey which since 2009 has increased in export value by 60%.

In light of this growth, significant investment is being made in the industry in Ireland. This is obvious in the more recent plans to establish “grass root” distilleries across the country – there are several in the pipeline at present. However, distillation is a slow grow investment due to maturation requirements – there is a 3 year maturity minimum for whiskey.  

The difficulty lies in securing upfront capital to construct the distillery when there is a possibility of no return for a minimum of 3 years. This delay in income has resulted in developers seeking alternative revenue streams for the “maturity” period. The most popular being the establishment of the distillery’s “visitor centre”.

Tapping into a steady increase in holidaymakers to Ireland since 2012, the visitor centre attracts visitors who are eager to ‘experience’ the Irish distilling process, to discover the history of the distillery and to taste the end product, even if the end product is, for the moment, distilled elsewhere.

Successfully established distilleries have, alongside the installation of operational stills, put in place a glossy/interactive tour, a Café, a Bar and a Visitor’s Shop – features aimed to drive up revenue but to also enhance the tourist experience and promote the ‘brand’ amongst foreign holidaymakers.

So in order to develop a distillery which can legally provide all of the above services what is required?

Licensing a Distillery

A distillery with a visitors’ centre requires two liquor licences – (a) a manufacturer’s licence and (b) a seven day publican’s on-licence. The manufacturer’s licence is required to produce the alcohol, whilst the publican’s licence is necessary if you provide more than a ‘tasting’ of alcohol on the premises. The publican’s on-licence would allow the visitors’ centre to have a full service bar, providing cocktails etc. or to operate as a unique venue for events.

Manufacturer’s Licence

A Manufacturer’s Licence is required by all Manufacturers/Distillers of spirits. The licence is obtained on application to the National Excise Licensing Office and on payment of the appropriate fee (€500.00), together with a tax clearance certificate, the applicant certificate of incorporation and certificate of registered business name. The licence authorises the manufacturing of liquor and the dealing of it on a wholesale basis.

Publican’s On-Licence

Acquiring a Publican’s licence is a three step process.

  1. An applicant firstly needs to acquire a Licence from another licensed premise which will be extinguished and transferred into the applicant’s name or the name of the relevant company/holding company etc. A Licence will typically cost between €65,000 – €90,000 and a legal agreement to transfer the licence will be negotiated and executed by the parties involved.
  2. Once a licence is secured, an application for a declaratory order can be made to the Circuit Court. The declaratory procedure allows an applicant to apply to the Circuit Court, in advance of initiating works on the premises, for confirmation that the proposed premise as outlined is suitable to be licensed.  At the hearing of the declaratory application objectors will be called. If the declaratory order is granted, the risk of any complications arising at the certificate stage (when the licence is granted) is significantly reduced as objectors are flushed out at the declaratory stage.
  3. The declaratory stage can be skipped and applicant’s can apply for a certificate to coincide with the opening of the premise. The certificate application is also made to the Circuit Court and involves similar proofs to the declaratory order. The Notice of Application for the certificate must be advertised in a national newspaper. However, if the declaratory stage is skipped, objectors may appear at the hearing of the certificate application. Objectors can significantly delay the hearing of the application which in turn will delay the opening of the premises.

For the declaratory and certificate stage, the applicant will also have to satisfy the Circuit Court that the premise to be licensed has never previously been licensed with a publican’s licence. This is confirmed through a search of the licensing register as far back as records exist, which should be verified by a search of the Valuation Office against the address of the premise. It would be worthwhile for this search to be undertaken prior to purchase of the premises and/or before development works begin. If the premise to be developed is a historic distillery it may have been previously licensed. This could give rise to complications at the declaratory or certificate applications which if possible should be identified at the outset.

Return on Investment

For investors, the main objective for a distillery is to manufacture a reputable spirit which has brand value in Ireland and the world. However, the distiller’s visitors centre provides potential for a tourist attraction akin to the Guinness Storehouse, which in 2015 was named Europe’s best tourist attraction, welcoming 13 million people since 2006.

A successful visitors’ centre can not only provide additional revenue but also a platform to create a brand ‘experience’ and/or brand ‘introduction’ which the developer/distiller can have complete control over.

For further information on liquor licensing contact Catherine Lyons or Maria Edgeworth.

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