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Springbank rumour distillery to be mothballed?

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Re: Springbank rumour distillery to be mothballed?

Postby vengey » Fri Jun 27, 2008 3:59 pm

We can only guess and we will probably not guess at the real reason.

My guess:

Costs have increased and because of their unique setup, (doing it all themselves) they are more susceptible to market prices in terms of their costs. To continue as they are, they'd need to increase the price of their existing range and they don't feel they can do that without it severely hitting sales. If they had to put a bottle up £10, maybe people would settle for something else.

It could very well be that their unique setup is the thing that's causing them trouble. Since they have previously sold off their old stock, there isn't much they can do about it.
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Re: Springbank rumour distillery to be mothballed?

Postby Di Blasi » Fri Jun 27, 2008 6:48 pm

Weird :?
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Re: Springbank rumour distillery to be mothballed?

Postby I_SPEY » Fri Jun 27, 2008 6:55 pm

Di Blasi wrote:Weird :?

Weird??? :oops:
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Re: Springbank rumour distillery to be mothballed?

Postby weetoon1 » Fri Jun 27, 2008 8:55 pm

Guys I live in Campbeltown, and have just spoken to one of Springbanks Directors.
He informs me that costs have indeed risen over the past year.
Light oil was 40p a ltr now 80.16p
Barley was £125 a ton now £250
They are to start building new warehouses on Glebe St, they have already
started refurbishing old buildings on that street.
He states that they will start producing next year, albeit with a smaller staff
The total staff redundancies were Seven, the duty rise has nothing to do with cut back in distilling. As usual local rag prints gossip!
The company felt it unfair to talk to anyone,until staff knew of decisions.
bottling hall, etc working as normal.
He states that his and the companies priority after making one of the worlds finest Malt Whiskies, was keeping the company a private family business and out of the hands of the big corps! As they have managed for over 180 years!
Good enough for us locals!
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Re: Springbank rumour distillery to be mothballed?

Postby Ryguy » Fri Jun 27, 2008 9:04 pm

Thanks for the info weetoon1, and Welcome to the Forums!! :D :D
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Re: Springbank rumour distillery to be mothballed?

Postby weetoon1 » Sat Jun 28, 2008 9:06 am

Sorry Guys!
to clear up the Prices thing.
WAITING ON PRICES TO SETTLE... they cant plan ahead as prices change daily
up as well as down.
They are hoping they settle as it is crazy to distill . When costs keep changing.
I am told that the price of the oil went from 40p to 65p overnight the following day it went down, then up to the 80p mentioned in the first post.
Suppliers are in the same position, they dont want to enter into long term dealls as they themselves dont know where the prices are going.
If the prices settle at £1.50 a ltr of oil...fine! at least they know what to budjet for!
Seems fair logic!
Other distilleries must be finding the same,with term agreements on prices coming to an end. where this will end God alone knows
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Re: Springbank rumour distillery to be mothballed?

Postby Deactivated Member » Sat Jun 28, 2008 2:48 pm

azazel wrote:
Nick Brown wrote:
sievm wrote:I hope that this doesn't lead to a longer term issue with the future of Springbank. The implications are that it might.

Indeed. Shutting down all production for at least two years is not a move made by a successful company. That's a move borne of desperation.


Where does it say that they're "shutting down all production for at least two years"?

Nick Brown wrote:
azazel wrote:I'd imagine that if they can calculate roughly how much it's going to cost to make whisky with some confidence, they'll be able to adjust their prices and spending accordingly.

I doubt that it's to do with the price of oil and barley. It's most likely about cashflow. The company must be stretched by the production costs of both Springbank and Glengyle, whilst the stock they hold is relatively young and will only be able to be sold at quite modest prices. It would be different if they had a stock of 25yo to knock out at superpremium prices, but they don't. Perhaps they had budgeted on a very tight cash flow anyway and the marginal increase in production costs means that it has gone beyond the level that could be supported by sale of their 10yo. But shutting down production gives them breathing space now, but will cause a problem 10 years down the line (if they get that far) where they have no stock to sell but production costs to meet.


Without knowing the details of the company's finances it's nothing more than wild speculation to suggest it's a cashflow problem. I'd suggest that the guy who owns Springbank has been around long enough to know how best to run his business, which, don't forget, is run unlike any other whisky company in the world. When I was at the distillery earlier this year they said that production costs had almost DOUBLED in the space of a year. That a bit more than a marginal increase in anyone's book.

Gosh - that was a bit aggressive!

The two years was reported above in the Courier article. Marginal cost increase means the difference between new costs and old costs. It doesn't mean it is insignificant - and obviously if it is resulting in the closure of the distillery then it is significant.

And as for knowing about the Springbank financial position - of course it is speculation. But companies with good cashflow don't shut down production.
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Re: Springbank rumour distillery to be mothballed?

Postby weetoon1 » Sat Jun 28, 2008 7:25 pm

Remind me what distillery do you Guys run?
They never said they were closing down for 2 years or more!
The only mention of 2 years was in the Courier... Who have no quotes
as Springbank did not talk to them. In fact they were asked not to print anything until the staff were informed.
As far as I know the duty thing was never mentioned apart from in the Courier. The courier also recently printed a doctored picture of a cat...claiming there was a puma loose in Argyll... So much for facts.

I read in the Kintyre forum they expect to distill January 2009
thats 6 months not 2 years.
I for the sake of my hometown that they manage as they have in the past to ride this storm (in a teacup ) and remain open as Scotlands oldest privately owned Distillery.
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Re: Springbank rumour distillery to be mothballed?

Postby Deactivated Member » Sat Jun 28, 2008 10:40 pm

A puma! No wonder Campbeltown is being boarded up and evacuated.




:D Just a little hysterical rumor-mongering....
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Re: Springbank rumour distillery to be mothballed?

Postby Deactivated Member » Sat Jun 28, 2008 11:56 pm

Crikey! I never expected that! Springbank will find it hard to come back if they shut even for 6 months given the changing climate. They might have been better toughing it old!
Poor old Campbeltown - just can't seem to hang on to any industry at all! Mind you it's so far out of the way and with the only line of communication being a shocking road, it's hardly surprising! But even still, I would have thought Springbank would have been able to keep it going!
Stock up now before FI gets his hands on it!!
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Re: Springbank rumour distillery to be mothballed?

Postby Deactivated Member » Sun Jun 29, 2008 12:17 am

Geez, Kenny, I can't tell if you're being silly-hysterical, like me, or really panicking. Take a deep breath! Springbank isn't going anywhere. There's apparently plenty in the warehouses--they're talking about building more, for crying out loud--and I'll bet that, in ten years' time, this little blip will be entirely forgotten, moreso than the production gaps of some years at such as Ardbeg and Bruichladdich. And even if the absolute worst happened (which I don't believe for a second), don't forget that we're still drinking Rosebank, Port Ellen, and Brora.
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Re: Springbank rumour distillery to be mothballed?

Postby Spirit of Islay » Sun Jun 29, 2008 12:37 am

Image
Don't Panic !











Sorry couldn't resist..... :P
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Re: Springbank rumour distillery to be mothballed?

Postby Deactivated Member » Sun Jun 29, 2008 12:53 am

Call me cynical, but given the great hype surrounding whisky and its wonderful future these days, is it not a bit strange that a distillery is stopping production at all?
I laughed loud when I saw this thread start but now it has been confirmed, (if not through usual media channels but on their chat forum) I feel that there is more to this than just challenging outlays which of course apply to all distilleries. Is this the start of another whisky collapse? No - I dont think so either.

Hardly hysteria TH - just reading tea-leaves. Let's see what happens in 6 months. If it starts distilling again, I'll send you what's left of my Springbank 100. If it doesn't, you own me a Popcorn Pultney :lol:
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Re: Springbank rumour distillery to be mothballed?

Postby Deactivated Member » Sun Jun 29, 2008 12:54 am

Spirit of Islay wrote:Image
Don't Panic !


:thumbsup: :lol:










Sorry couldn't resist..... :P
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Re: Springbank rumour distillery to be mothballed?

Postby Spirit of Islay » Sun Jun 29, 2008 1:13 am

We're all Doomed !!!!
Image

Did you ever hear the story of the auld empty warehouse ?
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Re: Springbank rumour distillery to be mothballed?

Postby orangedogofglory » Sun Jun 29, 2008 1:33 am

what are standard profit margins for distilleries? can't be too bad, at least 10% net?

I ask because it would seem that rising single malt prices would help offset rising cost prices. The market seems to be relatively inelastic and almost correlated as demand has been growing (assumed). Since these guys shouldn't be operating on commodity margins (think timber product companies), they should be able to comfortably weather the storm while operating. And, being a "private family" company, the shareholder's really shouldn't care if short term margins drop from 10 to 8%.

this line of reasoning could be wrong - I've never worked in a distillery-based business - but its what I'm sticking to and why I think Crieftan may be right about there being something else we don't know. and, because they are a family company, there is no real need to be particularly transparent on their end.

I don't think the sky is falling out, but from a business standpoint things don't really seem to add up - other than Tattieheid's earlier comment (which I hope I'm not misquoting) which was that they have an oversupply and need to liquidate inventory.
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Re: Springbank rumour distillery to be mothballed?

Postby weetoon1 » Sun Jun 29, 2008 9:42 am

5 Islay distilleries stop Distilling!!!
Lack of water reported!!
No whisky made for 2 week!
I hope its not a cashflow problem..just a waterflow problem
Having not seen their books.... We couldn't possibly comment!
What with global warming and all
Its all a ruse! buy more Malt whisky before it runs out, or there is a massive price hike!
Calm down Guys all will be fine, If it rains!
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Re: Springbank rumour distillery to be mothballed?

Postby Deactivated Member » Sun Jun 29, 2008 10:11 am

Two weeks - not a planned 6 months or 2 years. The Islay boys stopped producing because they had no choice - and I bet they weren't happy about it.
The Springbank situation seems to be an entirely different matter.
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Re: Springbank rumour distillery to be mothballed?

Postby Onefortheditch » Sun Jun 29, 2008 11:26 am

I for one will be going out and buying Springbank. This distillery sounds like its in danger here and I feel its my duty to do what I can to save it by increasing demand.

(And I also like Springbank (along with aboot 100 other distilleries), so any excuse will do!!) :)

Should we start a "save Springbank" campaign?
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Re: Springbank rumour distillery to be mothballed?

Postby r900p » Sun Jun 29, 2008 12:13 pm

Latest whiskycast 151 news is out today, Springabnk is in it, just about to start listening.

http://www.whiskycast.com/

Cheers,

Rob
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Re: Springbank rumour distillery to be mothballed?

Postby Spirit of Islay » Sun Jun 29, 2008 1:15 pm

Crieftan wrote:Two weeks - not a planned 6 months or 2 years. The Islay boys stopped producing because they had no choice - and I bet they weren't happy about it.
The Springbank situation seems to be an entirely different matter.


The Springbank situation is getting like their whisky imho , a little hyped up......

Don't forget everyone's entitled to an opinion here......
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Re: Springbank rumour distillery to be mothballed?

Postby Spirit of Islay » Sun Jun 29, 2008 1:34 pm

:lol: Willie !
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Re: Springbank rumour distillery to be mothballed?

Postby Newbie » Sun Jun 29, 2008 5:20 pm

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Re: Springbank rumour distillery to be mothballed?

Postby Newbie » Sun Jun 29, 2008 5:23 pm

More information can be found here as well - where is the edit button when you need it!

http://www.maltadvocate.com/what-does-john-know.asp
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Re: Springbank rumour distillery to be mothballed?

Postby Deactivated Member » Sun Jun 29, 2008 8:04 pm

weetoon1 wrote:Remind me what distillery do you Guys run?
They never said they were closing down for 2 years or more!
The only mention of 2 years was in the Courier... Who have no quotes
as Springbank did not talk to them. In fact they were asked not to print anything until the staff were informed.
As far as I know the duty thing was never mentioned apart from in the Courier. The courier also recently printed a doctored picture of a cat...claiming there was a puma loose in Argyll... So much for facts.

I read in the Kintyre forum they expect to distill January 2009
thats 6 months not 2 years.
I for the sake of my hometown that they manage as they have in the past to ride this storm (in a teacup ) and remain open as Scotlands oldest privately owned Distillery.

Weetoon - that's an odd post - are you a manager at Springbank? Just curious because you seem to know what was and was not said to the local press, and unless you are the local press or Springbank, I'm, not sure how you'd know. Perhaps there's another explanation. But saying that nobody had talked to the Courier and then saying that the Courier had been asked not to print anything until staff had been told seems a little contradictory.
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Re: Springbank rumour distillery to be mothballed?

Postby weetoon1 » Sun Jun 29, 2008 10:18 pm

I do not work at Springbank!
I am friendly with a manager
The courier asked for a quote, and the co sec asked them not to print until staff informed. So they printed anyway,even if they had to make it fit roumors they heard round town!
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Re: Springbank rumour distillery to be mothballed?

Postby Deactivated Member » Sun Jun 29, 2008 11:36 pm

Well, I'm sorry, Weetoon, if I jumped to an incorrect conclusion. I'm still left wondering, though, whether Springbank isn't in some sort of trouble. Laying off staff and ceasing production is a drastic step, especially in a small company that doesn't have other working distilleries to tide them through a period of mothballs on some sites. And if the explanation is straightforward, then I am in the bizarre position of agreeing with Mark Reynier (quoted in Peatfreak Forum: http://www.peatfreak.com/forum/viewtopi ... 3&start=15) - an odd decision from a very odd bunch of people.
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Re: Springbank rumour distillery to be mothballed?

Postby Iain » Sun Jun 29, 2008 11:43 pm



Scotchblog and others link to the Sunday Herald article at http://www.sundayherald.com/news/herald ... s_grim.php

It includes some quotes attributed to Campbell Evans (one should bear in mind that Springbank's owner has never been flavour of the month at SWA HQ!) and another attributed to Mark Reynier, that it is an "odd decision from a very odd bunch of people", which seems a bit harsh (if accurately quoted, of course).
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Re: Springbank rumour distillery to be mothballed?

Postby Calliope » Mon Jun 30, 2008 8:18 am

weetoon1 wrote:I do not work at Springbank!
I am friendly with a manager
The courier asked for a quote, and the co sec asked them not to print until staff informed. So they printed anyway,even if they had to make it fit roumors they heard round town!

Weeton, judging from your use of exclamation marks, you're a bit surprised at the newspaper reaction, but you shouldn't be. To the press, a story is news even before an official statement is released and if the only word they can get on it is opinions and gossip, then that is what they print. I'm not surprised they printed a story despite being asked to wait. Once the manager knew a reporter had the story, he should have told his staff sooner.

As far as what they print even after an official statement is released - newspapers (even local ones) are in the business of producing something that people will find interesting to read, not of reproducing company spin (and even with little companies, it's always spin.) In this case there will be a lot of speculation and guesswork going on because it's obvious that people aren't being given the full story and, economically, it's a very, very strange decision to make.
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Re: Springbank rumour distillery to be mothballed?

Postby Deactivated Member » Mon Jun 30, 2008 10:24 am

What I find even more alarming is that Springbank have not taken any steps to rebutt speculation. Thay have had plenty time to get a press release out but so far have remained silent.
They have mentioned it briefly on their website forum (to which someone has correctly asked what it means to no avail) but there is no other mention of the story in their news section or anywhere else.
Given the story (whether it be true or not) has been reported in the local comic......sorry paper, they really ought to have come out fighting.
Their spin doctor really hasn't earned his/her keep!
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Re: Springbank rumour distillery to be mothballed?

Postby sievm » Mon Jun 30, 2008 11:48 am

Other distilleries are in the same position regarding raw material prices - most seem to be happy still making money even with the current increases in barley and energy prices.

Barley prices have been artificially low for a number of years and are just returning to realistic prices. Energy prices are going to continue going up. Yes they may well stabilise but they aren't going to return to last years prices - demand is far outstripping supply in both areas.

If the stoppage is only 6 months then it seems an even stranger move - the cost of laying off and then re-hiring staff must be pretty steep.

I would agree it may be just a cashflow issue but with whisky selling for ever increased prices then they will no doubt reverse the issue if that is all it is. If they have enough stock in the warehouse then the problem will not necessarily carry over - they will just need to cover stock with older than they would have needed to if they had not shut down.

Let's hope it is just temporary and they continue to remain the fine independent distillery that they are - because they will be high up on any buyers wish list.
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Re: Springbank rumour distillery to be mothballed?

Postby Newbie » Mon Jun 30, 2008 12:20 pm

Most people are saying this is a strange economic decision for Springbank to make but is it really?

In the whisky industry there seems to be a boom phase at the moment with everyone increasing production with forecasts of increased demand for whisky. So with this in mind I suppose it is strange that Springbank is doing the opposite of what many distillers are doing.

But globally there are signs of a recession looming and massive inflation on all food and fuel products. At the moment the global economy is in a period of uncertainty and in light of this perhaps it prudent for a small company not to expand but to consolidate it's assets and prepare for the worse.
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Re: Springbank rumour distillery to be mothballed?

Postby Deactivated Member » Mon Jun 30, 2008 12:34 pm

The Springbank decision looks like selling off assets rather than consolidating them. I can't see a cessation in all production as being a prudent strategy unless you are looking to leave the industry altogether - or unless you have a very dire cashflow crisis.
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Re: Springbank rumour distillery to be mothballed?

Postby Newbie » Mon Jun 30, 2008 2:50 pm

Thats the thing though Nick, thats just your opinion. You may well be right but I am offering an alternative perpective on this matter as was Weeton. Yet you keep hammering your viewpoint accross and criticising anyone who has thoughts that differ from your own.

How are Weeton's views any less creditable than yours?
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Re: Springbank rumour distillery to be mothballed?

Postby Deactivated Member » Mon Jun 30, 2008 3:33 pm

Why is it so difficult to take them at their word--that they are taking an operational hiatus while prices for materials are in a state of flux, doing some necessary maintenance, and "rightsizing" ( :yuk: ) their workforce? Doesn't the specific mention of their intent to increase warehouse space indicate optimism for the future? This is not Diageo or LVMH; small independents often do things on their own schedule. How many days a year, for example, does Bladnoch distill?

I honestly think there's a lot of needless hysteria going on here. Take a chill pill, everybody.
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