Springbank rumour distillery to be mothballed?

[Spirit of Islay]

Willie !

[Newbie]

More info regarding the 'rumour'!

http://www.thescotchblog.com/2008/06/springbank-is-not-being-closed.html#comments

[Newbie]

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

[Deactivated Member]

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.

[weetoon1]

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!

[Deactivated Member]

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.

[Iain]

More info regarding the 'rumour'!

http://www.thescotchblog.com/2008/06/springbank-is-not-being-closed.html#comments

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).

[Calliope]

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.

[Deactivated Member]

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!

[sievm]

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.

[Newbie]

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.

[Deactivated Member]

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.

[Newbie]

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?

[Deactivated Member]

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" ( ) 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.

[Jimmy321]

I have just looked up Springbank and assoicated companies on our credit check at work (records are from companies house) and there seems to be no problem with finance at all, infact out of a score of 77 to 1 they have 1 being the highest score possible.

[sievm]

Does the credit check really indicate cash position? Just because a person has a good credit score doesn't necessarily mean they have a lot of cash.

If they are still cash rich then I think it makes it a stranger decision - IMO.

Hopefully they must have calculated that they have enough stock to fulfil all future projected single malt needs. Guess it might mean that there won't be any Springbank for blending or independent bottling.

And I don't think that there is any hysteria here - just people discussing a decision in the industry that a few of us don't fully understand.

[Jimmy321]

There is no indication of 'cash' position, i am back at home now so i cant look at the details and i would not post actual figures. Anyone can obtain them from companies house if they wish, let me say that the figures look good.

[weetoon1]

Mark Reynier, managing director of the Bruichladdich distillery on Islay, said it was an "odd decision from a very odd bunch of people".
He said: "They are not like other businesses. Maybe they decided they just could not be bothered."

[kallaskander]

Hi there,

read that too and my first thaught was that this was strange coming from this side.

A penny for every time somebody thought the same about Bruichladdich.

Well, Springbank`s mangemant will have their reasons for what they do.

The arguments may not seem conclusive to us at this time but do we know what strategy and what kind of thinking is behind the decisions they make?

Do we have all the facts?

No matter that Springbank seems unwilling to lay all the cards on the table. Nor do they have to.

Let it stand here and let the case rest. The further developments will show how the land lies. There is Springbank malt for the next two years and they plan to extend their warehousing capacity. Isn´t that all we need to know for the moment?

Let us lay back and watch. And raise a glass of Sprinbank now and then. That is probably all the help we can give.

If they want or need any help at all.

Slainte
kallaskander

[Deactivated Member]

If people don't like discussions then a forum may not be the best place for them.

I still contend that companies exist to make things - and that's how they make their profit. If they decide to stop making things it is (according to conventional wisdom) a sign that one of three things is happening:

they are no longer profitable
they have serious cash flow problems
they are looking to leave the business

Now most companies are inherently profitable and if/when they go to the wall, it is usually due to cash flow.

Of course, it is possible that Springbank is profitable, has plenty of cash in the bank and intends to remain in the distilling business. But that would, as Mr Reynier said, make their decision look very odd indeed.

[Deactivated Member]

If people don't like discussions then a forum may not be the best place for them.

I'm all for discussion. I think unsubstantiated rumors, unfounded speculation, and wild guessing should be identified for what they are.

I still contend that companies exist to make things - and that's how they make their profit. If they decide to stop making things it is (according to conventional wisdom) a sign that one of three things is happening:

they are no longer profitable
they have serious cash flow problems
they are looking to leave the business

...or they have decided that this is not a good moment to be making things, there are plenty of things in the warehouse, for the time being their energies are better directed elsewhere.

[Deactivated Member]

...or they have decided that this is not a good moment to be making things, there are plenty of things in the warehouse, for the time being their energies are better directed elsewhere.

That would only make business sense if they thought that making things was not profitable.

[Deactivated Member]

Has anyone bothered to phone them?? lol!

Give them a wee call and see if they will comment for the Whisky Mag, otherwise its just pure speculation!

On a different note - anyone got some Springbank they want to sell just incase??

lol!!

[kallaskander]

Hi there,

even as I spoke out for letting the issue rest at the moment I am all for discussion and interested in diverging opinions.

But do wild speculations really help? I am all for educated guesses but are we really educated in the matter?

Anyway here are some more opinions on the subject.

http://www.thescotchblog.com/2008/06/sp ... l#comments

http://www.thewhiskychannel.com/detail.php?id=364


The context of the following news items is interesting. First the news about Springbank on 27th of June and the following day the news about short whisky supplies.

http://www.whisky-news.com/En/news.html


What do we make of it?


Greetings
kallaskander



http://www.whisky-news.com/En/news.html

[Deactivated Member]

Has anyone bothered to phone them??

I probably wouldn't believe anything they said - even if it later turned out to be true. Right now, the problem is that there is a mismatch between what Springbank is doing and their explanation for it. Whenever that happens, people will start to surmise the truth. And it's not just me that will be doing that, either.

[irishwhiskeychaser]

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.

Ahhhh Nick, come on ..... who ever mentioned selling off assets ... You are now adding further fuel and even more wild speculation to the fire..... I never took you for a tabliod hack.

Unless you of course consider continuing to sell stock in their usual manner as selling assets well.

Has everybody forgot that they are building more storage capacity and other refurbs while the shut down is in effect .... that to me does not sound like a company in trouble of any sort not even a cash flow problem as they are still spending. Maybe it is a simple case of lack of space in which a 6-12 month stoppage will give them the opportunity to expand which to me sounds more probable

Mountians and mole hills "springbank" to mind

[corbuso]

Right now, the problem is that there is a mismatch between what Springbank is doing and their explanation for it. Whenever that happens, people will start to surmise the truth. And it's not just me that will be doing that, either.

I do agree with you, but since they are a private company, they can do like they want.
Some years ago, they had a problem of cash flow and now, with the opening of Glengyle and increased prices in oil and barley, I would guess that money is key in their decision. If the situation would improve, I think they will come back on their decision...
For the time being, enjoy their latest products (e.g., Longrow 18 YO).

One thing for sure, is that the prices for the old Springbank and Longrow will not to go down...

Corbuso
.........
http://www.whisky-news.com

[Deactivated Member]

A distillery's main assest is its stock of maturing whisky. If it is going to sell stock and not replace it with new stock, then it is selling off assets.

Any distillery can see availability of space in warehousing and if it was genuinely running out of space, it would have had plenty of time to put a contingency plan into place. Capacity can be got easily and quickly if needed. Making production staff redundant and shutting down all production is a significant and expensive step for any industry and I cannot imagine that lack of warehouse space has led to the current state of affairs.

And the explanation about high production costs is a red herring too - unless Springbank believes it can no longer make whisky profitably. And high production costs have nothing to do with availability of warehousing.

I'm no tabloid hack, but this story sets so many alarm bells ringing that one can only wonder at what is going on. I wonder whether they mightn't have overreached themselves in setting up Glengyle.

[Deactivated Member]

A distillery's main assest is its stock of maturing whisky. If it is going to sell stock and not replace it with new stock, then it is selling off assets.

What a strange way of looking at it...would it be more fiscally prudent of them to stop welling whisky immediately?

[Deactivated Member]

"Selling".

[Newbie]

If only whisky could be welled Mr T

Everything is speculation until proven otherwise and all the guessing and hypothesis are turning this thread into trashy tabloid reading!

[Jimmy321]

Perhaps they are overstocked?

[Deactivated Member]

A distillery's main assest is its stock of maturing whisky. If it is going to sell stock and not replace it with new stock, then it is selling off assets.

What a strange way of looking at it...would it be more fiscally prudent of them to stop welling whisky immediately?

I don't think it is that strange. Although in a shop, stock is dead money, in whisky terms it is an investment. You should see the value increasing with time as the whisky ages. And since a distillery (usually) sells aged stock rather than new stock, in order to make money it needs to sell old stock and make new stock. If you find you can no longer sell stock, you get no income - and if you no longer create stock you are living off your reserves. Most businesses operate with a level of debt so they need income to service the debt.

I really don't think this thread is like the tabloid press. It has the potential to be an interesting discussion of economics. And since Springbank is a private company, speculation here won't affect the share price so I can't understand why some people are so impassioned to shut the discussion down.

[irishwhiskeychaser]

Nick 'Tabloid Hack' was used with tongue in cheek.

Anyway ..... I dont think people are trying to shut the conversation down just trying to get a bit of perspective on it as it seems to be going in just one direction. Which is Springbank are wrong to be doing what they are doing.

My perspective is I feel there is nothing major to worry about. Yes it probably is a cost cutting exercise but maybe the stoppage is purely political, an exercise to honor the lay offs (so to speak) after all it is a very much local affair. Or the cynical amongst us could say it is to avoid local conflict and animosity.

As far as I'm aware springbank has up-ed it's stocks over the last few years and I don't think there is a fear of it running dry any time soon and in all fairness it is not that hard to plug a years gap. But once again we don't know for certain that there will be a full stop on production.

Sometimes it is too easy to see the negative side

[Deactivated Member]

Well I certainly hope that Springbank is not in difficulty and resumes production of their terrific whisky. I know I'm a bit of a black hat, but you'd miss me if I weren't here.