A Distillery Start-Up by the Numbers: Sliabh Liag's Story So Far

If you’ve ever thought about starting your own distillery, you might be curious about some of the dollars and cents that go into it. Most start-ups are quiet about the financial side—preferring that you focus on the whisky rather than the balance sheet, and also because virtually all start-ups lose money in their early years.

Ireland’s Sliabh Liag Distillers (pronounced sleeve leeg) was founded with the vision of making peated Irish whiskeys under The Legendary Silkie brand name. Based in Donegal, the idea was to revive the distilling heritage of this far northwest Irish county, where the whiskeys of generations ago were all made using malt peated by Donegal turf. Founder James Doherty was an international drinks executive living in Hong Kong in 2014 when he and his wife Moira got the idea—and left to start the company, with the choice of Donegal inspired by the legacy of his Donegal grandfathers, who enjoyed their tipples peated.

The Legendary Silkie whiskeys entered the U.S. market in 2020, and include The Legendary Silkie (lightly peated, $44), The Legendary Dark Silkie (cask strength and peated $49), The Midnight Silkie (heavily peated, $52), and the limited edition Red Silkie (peated and finished in Rioja and Ribera del Duero red wine casks, $62). All are bottled at 46%. Named for the mythical mermaid creatures of Ireland’s Atlantic coast, these releases have done well with Whisky Advocate’s tasting panel, with all except The Midnight Silkie scoring 90 points and above.

High Revenues Versus High Costs

Recently Sliabh Liag took the rare step of revealing the numbers on current progress. They show healthy growth, but also the costs involved in this type of start-up. Last year’s sales nearly doubled to €2 million ($2.1m), up from just over €1 million ($1.05m) in 2021. Growth was driven by expansion in the U.S. and other export markets, with sales of all its bottled brands growing by 58% and the Silkie label up 67%. (The company also makes an artisanal maritime gin called An Dulaman, as well as a vodka, not available in the U.S.) The Silkies are now selling 36,000 bottles annually in America, and are imported by Ramona, California-based Preiss Imports.

While growth has been strong, now the race is on between rising sales and rising costs—a situation typical of start-ups. Last year’s expenses increased from €2 million ($2.1m) to €3.2 million ($3.4m). Pre-tax losses rose from €1 million ($1.05m) to €1.3 million ($1.4m), and accumulated losses hit €5 million ($5.3m). Debts to creditors were at just over €3.4 million ($3.6m). In addition to distribution and marketing expenses, the start-up costs have surrounded the building of a new, state-of-the-art distillery in the Donegal village of Ardara, which began production in 2022. Up until now, Sliabh Liag has been utilizing whiskey sourced mainly from Ireland’s Great Northern Distillery.

The cost of building Ardara came to €3.5 million ($3.7m). “We were lucky to build through the lockdown as I suspect it would have cost €1-2 million more post-Covid,” says Doherty. The project was done by Forsyths, which is best known for its copper stills but also builds entire distilleries in turnkey projects, managing everything from start to finish. Ardara has an annual capacity of 500,000 liters and is currently on a 6-day, 2-shift per cycle schedule. While Sliabh Liag’s current sourced whiskeys are blends, some 70% of Ardara’s production is in single malt, while the remaining 30% is single pot still. All are peated.

“Most of the single malts made at Ardara are heavy peated at 55ppm, though there is some medium peated at 25-30ppm and small quantities of lightly peated at 15ppm,” says Doherty. “Our pot still is at 50-30-30-—50% heavily peated malt, 30% raw barley, and 20% oats that are malted and peated when we can get it. We have my grandads’ poitín recipes which are oat heavy, and that’s what we respect in our pot still recipe.”

Finding The Funds

Sliab Liagh, which has 23 employees, has funded the company from a mix of investment sources. Key sourcing has come from the government agency Enterprise Ireland, regional authority Údarás na Gaeltachta (The Gaeltacht), and the regional agency Western Development Commission, as well as the Asahi Group Holdings, owner of Japan’s Nikka Whisky Distilling Co.

The company also used crowdfunding in 2020 to raise capital for the distillery, successfully completing a round that became that year’s fifth-biggest crowdfund in Europe’s drinks sector, and last year it did a second crowdfunding round. In total, the Sliabh Liag counts about 1,500 individual investors, whom it calls the teaghlach, the Gaelic word for family. For now, Sliab Liag has completed this phase of investing though it still encourages “high net worth individuals” to contact them.