Red tape delays whisky project as Blackwood sees sales soar

Production is unlikely to start at Shetland's first legal whisky distillery until at least 2007 as hold-ups in the planning process continue to thwart progress.

However, the company's pre-selling of the first year's output from the proposed distillery has offset some of the investment risk, said the company.

Planning permission to build the distillery in Lerwick was originally granted to premium spirits maker Blackwood Distillers in mid-2004. However, when a survey uncovered a problem with the site and plans were revised to move the distillery to another spot just 150m away, Blackwood was forced to go through the application process again.

When permission was finally granted for the new site last spring, it came with a raft of conditions, said the company's founder and chief executive Caroline Whitfield.

"The major problem has been getting a building warrant, which we still don't have. In the rest of the UK you can build without one. In Scotland, you can't. The difficulty is that we are the first distillery here, which means, from a planning perspective, there isn't any precedent and the degree of caution with which every single thing is assessed is heightened. We've also had to do further tests with the Scottish Environment Protection Agency."

After the warrant is granted, the distillery will take a further four months to build, she said.

"There will then be a six-week pause while the stills are installed, and another month finishing off. After that, you have about three to four months of trial distillation.

"Legally, the whisky then has to mature for a minimum of three years and a day, which means we are not going to be able to start selling anything until at least the end of the decade."

However, the success of Blackwood's premium gin, vodka and vodka cream liquer meant that buyers in the UK and overseas were already clamouring for the whisky, she claimed.

"We've already pre-sold our first year's worth. This greatly mitigates the risk for investors." Operating in Shetland rather than on the mainland will cost 26p per bottle but did not concern her: "People pay for provenance. We're doing a single malt from a location that is absolutely perfect for making whisky. We can't compete on price, so we are offering something utterly distinctive.

"It wouldn't be commercially viable to bottle the product in Shetland, so we'll do that on the mainland." The company's spirits are made on the mainland using ingredients from Shetland.