Wales’ leading whisky producer, The Welsh Whisky Company, last week unveiled the third Penderyn Distillery together with a visitor centre and shop on the site of the historic Hafod Morfa Copperworks in Swansea.
The Moodie Davitt Report was on hand to view the inauguration of the facility, which is capable of outputting 400,000 litres of pure alcohol per year. It will act as a springboard to double Penderyn whisky’s travel retail business by 2025 amid projected strong global growth.
The grand opening caps Penderyn’s meteoric rise to become the UK’s eighth biggest-selling single malt whisky, and its third fastest-growing (according to Nielsen data) since the brand’s foundation just 19 years ago. It will begin production in the next few weeks.
The state-of-the-art distillery was formerly the home of a copper smelting plant. The plant was a primary contributor to an area in a 20-mile radius of Swansea which produced nearly 90% of Britain’s, and half of the world’s, copper in the 19th century. In its industrial heyday, this level of copper output gave rise to Swansea becoming known as ‘Copperopolis’.
The facility – in which the link between copper and whisky making is referenced throughout – is the culmination of a collaborative effort between Penderyn Distillery, Swansea Council and Swansea University. The National Lottery Heritage Fund, Swansea Council, Welsh Government Economy and Transport funding, and Penderyn, have collectively contributed £15 million (US$19.6 million) to the successful realisation of the ambitious project.
The distillery will increase the number of bottles Penderyn – which is privately-owned by over 60 shareholders – is able to produce each year by up to +130%, from approximately one million to 2.2-2.3 million annually.
It adds to the original Penderyn Distillery in the Brecon Beacons National Park, which has a similar production capacity, and the company’s smaller Llandudno distillery which opened in May 2021.
The Welsh Whisky Company Business Development Director Simon Roffe told The Moodie Davitt Report: “One of the great things about Penderyn is that we have a real community aspect to the business wherever we are; we want to expand because we make an impact on the community.
“That’s an important aspect of our brand story. This project is partly about bringing value and creating wealth back in an area that until the middle of the last decade was run down. Of course, it is also about significantly boosting our whisky production capacity – this gives us a platform for growth in a number of different ways.”
Travel retail growth
A significant part of that growth will come from travel retail. The new distillery opens up the prospect of a much-increased flow of product into the channel, where Penderyn has a burgeoning business anchored by multiple UK airport listings with Dufry.
“We’ve grown phenomenally over the last few years,” said Roffe. “The challenge of the pandemic was an opportunity for brands like Penderyn, as we’re not so wedded to the on-trade environment. The role and expansion of ecommerce meant that people were looking more widely for new things online. We are also benefiting from wider exposure in UK supermarkets, where we have a strong portfolio of listings.”
Roffe said the challenge ahead “is to grow harder our international and travel retail business”. He said the aim is to shift from the current 70% UK/30% international split closer to 50-50, with travel retail representing about 10% of the business, rising from its current 5% level in the next two years. “That’s a realistic target, building on our achievement of doubling our travel retail business between 2019 and 2022,” he said.
“Travel retail – although the margin model is tight – plays a key part in the Penderyn brand’s development in that we see it very much as a window for our brand around the world,” Roffe continued. “We’re quite focused and targeted in terms of where we want to be [in airport retail] and that means we’re not going to want to chase every opportunity that comes to us.
“So, we’ll be quite selective also about the duty free operations that we work with and where we can go because we ultimately have limited amounts of stock. That means we have to focus hard on maximising the value of every bottle that we sell.
“The [travel retail] strategy is about introducing the Penderyn Dragon range, taking people up to the more premium range [Penderyn Gold] and bringing a little bit of exclusivity to our offer through single cask releases and travel exclusives.”
Roffe revealed that a travel retail-exclusive variant will soon be introduced to its key Penderyn Gold range, which currently comprises five expressions differentiated by cask finishes. The new product, the one-litre Penderyn Gold Faraday, will be unveiled at the TFWA World Exhibition in Cannes. This name is taken from the creator of Penderyn’s distinctive copper stills, Dr. David Faraday, a descendant of the renowned scientist Michael Faraday.
Key listings
Roffe – who joined The Welsh Whisky Company three years ago, bringing two decades of high level travel retail experience from the likes of Diageo, Rémy Cointreau and Halewood Wines & Spirits – has played a key role in winning a series of Penderyn listings with leading travel retailers.
Those players include China Duty Free Group (CDFG) in Hainan, Dubai Duty Free, JR/Duty Free at Tel Aviv Ben Gurion Airport, DFS at airports in North America, and ARI subsidiary Portugal Duty Free in Lisbon and Porto. More will soon follow across Asia, Roffe said, with key retailers at airports in Malaysia, and with Lotte Duty Free in Singapore and Australia.
On Penderyn’s success in winning highly-competitive shelf space in key duty free locations such as these, Roffe said: “There is a growing demand from consumers for whiskies outside the strongholds of the category – the Scottish, Irish and US products. More whiskies are now being produced in dozens of countries outside those markets.
“Many emerging brands from these countries are doing different, innovative things, be that distilling maturation, packaging and so on. We see ourselves very much as pioneers in this ‘world whisky’ category and we really understand what the modern whisky drinker is interested in.
“Scotch is very good, but people are moving beyond that, looking for that ‘funky’ stuff, particularly younger drinkers. That’s our door into duty free, alongside other emerging brands from countries such as Sweden, Austria, Denmark and Australia.”
Breaking into Asia
Penderyn’s credentials in this area have been key to opening up opportunities in Asia, not least with CDFG according to Roffe. “If you’re looking to grow from a premium perspective, then Asia clearly is a fertile area to focus on. Winning business with CDFG is a huge boost for our travel retail efforts. Even if you can capture just a very small element of the Chinese market that is huge for us.
“CDFG placed a couple of orders with us in TFWA Cannes last year, which just changed the scale completely in terms of our travel retail business.”
Roffe said a major challenge is to build Penderyn brand awareness in the Chinese market. “This is being achieved through a network of trade marketing agents. It was helpful to be in Singapore [at the TFWA Asia Pacific Exhibition] in May to identify and find partners who can execute for us in China, providing activation and the legwork on the floor.
“We’re just now going into the CDFG stores in Hainan, and our new partners are activating those listings, ensuring rotation of our product range and building awareness. Otherwise, product just goes onto the shelves and sits there and doesn’t get any understanding. That’s a massive piece of work that we have to do moving forward.”
Asked for his message to travel retailers who have not yet got onboard with the Penderyn brand, Roffe said: “I think there’s a couple of points. Firstly, we are a premium single malt whisky at a great price. We offer great value. The second point is that increasingly we see consumers wanting something different, wanting something new.
“We’ve seen that happen in the wine trade, it happened again with the gin business and it is happening with single malts, as the consumer seeks innovation and new brands. Penderyn is a guaranteed success for a retailer – we can demonstrate that through the great results we have achieved in the UK and around the world, so they are not listing an unknown brand. They’re putting a brand on the shelf which people respect and understand, and can see a future in.” 
