Contract distilling and sourced whisky
Many whisky brands start with spirit made by someone else. Some buy matured stock. Others pay a distillery to make new make to their recipe. Both routes can work. This guide explains the difference and the points a founder should settle in writing before any money moves.
Two routes that often get confused
Sourced whisky means buying whisky that already exists: new make or matured casks from a distillery's own stock, usually through a broker or directly. You choose from what is available. Contract distilling means paying a distillery to produce spirit to your specification: your mash bill, your yeast, your cut points, sometimes your casks.
Sourced stock gets a product to market faster because the ageing has already happened. Contract new make gives you a spirit closer to your own idea, but you then wait for it to mature. Many founders do both: they launch on sourced whisky while their contract spirit sits in casks. Our guide to how whisky is made covers the stages that the contract has to describe.
What the specification must say
For contract distilling, a vague brief produces a generic spirit. Put these in writing:
- grain bill and malt specification, including any peat level in ppm phenol
- yeast strain and fermentation time
- still type and the strength range for the heart cut
- cask type, cask size and filling strength
- the analysis supplied with each batch, such as ABV, volume and a congener panel
- who owns the spirit at each stage and who bears loss
Fermentation time alone changes spirit character noticeably. A short fermentation and a long one in the same distillery can produce quite different new make, so name the number.
Ownership, warehousing and loss
Whisky in a cask loses volume and strength every year. In Scotland the commonly quoted figure is around 2% of volume a year. In Indian heat losses run well above that. The contract must say who carries that loss, how casks are regauged and how often you receive a stock statement.
Ask for ownership of each cask to be recorded by cask number, with a regular statement showing original litres of pure alcohol at filling and the current regauged figure. Pure alcohol is litres multiplied by ABV, so a 200 litre cask at 63.5% holds 127 litres of pure alcohol. That figure, not the cask count, is what you are buying.
Rules and labels
Labelling rules follow the place the whisky was made, not where your brand sits. Scotch must be distilled and matured in Scotland for at least three years in oak. An age statement refers to the youngest whisky in the bottle. Other countries have their own definitions. In India, excise rules on moving spirit between licensed premises, warehousing in bond and bottling vary by state and change, so plan the movement of stock with a licensing adviser before it leaves the distillery.
Be honest on the label. Many respected brands say plainly where their whisky was distilled. Customers forgive sourcing far more readily than they forgive a story that turns out to be invented.
Checking quality before you commit
Ask for samples from the exact casks or batches you will receive, not a generic house sample. Taste them blind against two or three reference whiskies. Get an independent lab analysis of strength and a congener panel. For matured stock, ask for the fill date, cask type and warehouse history of each cask.
The supplier knows its stock far better than a first time founder does. That gap in knowledge is the real risk in sourcing. Closing it means understanding fermentation, distillation and maturation well enough to read a spec and taste a sample critically.
Budget for the years in between
Contract new make is cheap compared with matured stock, but the cash is tied up for years. A founder who fills casks today pays for spirit, casks, warehousing and insurance long before a single bottle is sold. Model that cash on paper first. Our guide to malt, grain and blended whisky explains why the style you choose also changes how long you wait.
Sourced matured stock flips the problem. It costs more per litre of pure alcohol, but it can be bottled and sold this year. Many founders find the first range has to be built on sourced whisky simply to keep the business alive while their own spirit matures. Plan both lines together, with dates on each.
What to do before signing
Founders often focus on price per litre and forget the terms that cost more later: loss, storage fees, cask replacement, minimum volumes and what happens if the distillery changes hands. Have a lawyer review the contract and a distilling adviser review the specification. Those are two different jobs.
Your first step: write a one page specification for the whisky you want, covering grain, yeast, fermentation time, cut strength and cask, before you speak to any supplier.
Common questions
What is the difference between contract distilling and sourced whisky?
Sourced whisky is existing stock you buy. Contract distilling is spirit a distillery makes to your specification, which you then mature.
Can I launch a whisky brand without a distillery?
Yes. Many brands start with sourced or contract whisky. The label must follow the rules of the country where the whisky was made.
What should a contract distilling agreement cover?
The full specification, batch analysis, cask ownership, warehousing, evaporation loss, stock statements and what happens if the distillery is sold.
Who pays for evaporation loss in a contract?
Whoever the contract says. Settle it in writing, with regauging and regular stock statements, before you sign.
