Cantor Fitzgerald Investors Achieve Another Irish Whiskey Exit

Conor McKeon


Cantor Fitzgerald Investors Achieve Another Irish Whiskey Exit

Backing a train of successful Irish whiskey start-up businesses continues with Cantor Fitzgerald recently exiting from Lough Gill Distillery following the sale of the business to Sazerac Company. Sazerac is one of the world’s largest spirits groups with brands including Southern Comfort, Paddy Irish Whiskey and Buffalo Trace Bourbon amongst its extensive portfolio. Cantor Fitzgerald clients have been key supporters to the development of the Lough Gill Distillery and backed the business in three separate tranches of €4m each between 2017 and 2019, investing a total of €12m through the Employment and Investment Incentive Scheme (EIIS). The funding facilitated the build out of a 1-million litre distillery on the Hazelwood Estate on the shores of Lough Gill, outside of Sligo town.


This financing was integral to the development of the distillery and to the subsequent acquisition by the Sazerac Company. In addition to providing a successful investment return for our clients, the EIIS investment has assisted in building one of Ireland’s largest distilleries with the potential to create significant local employment in the Sligo area. While the consideration for the business has been speculated by the media to be in the region of €70m, Cantor Fitzgerald investors have received a full return on their capital plus upside per the investment terms and obtained the tax relief available under EIIS. All in all, this represents an excellent outcome for investors.


In recent years Cantor Fitzgerald has been involved in a number of transactions within the Irish whiskey sector including successful exits from both Great Northern Distillery and West Cork Distillery, while also investing in Powerscourt Distillery. The exits from both Great Northern Distillery and West Cork Distillery represented a successful return on early stage EIIS investments – demonstrating how the Employment and Investment Incentive Scheme (EIIS) remains a key source of funding for early stage, high growth businesses. Investors in both these schemes received their capital plus upside back and obtained the tax relief under the EIIS.


Like many sectors, COVID has had a negative impact on the overall drinks industry over the past two years. However 2021 did prove to be a year for recovery and resilience for the Irish drinks industry. According to the Bord Bia Export Performance Report 2021/2022, the level of overall drinks exports increased by 19% in 2021 to an estimated €1.62 billion, similar to levels achieved in 2019. One of the key drivers around this recovery has been the focus on positioning the Irish drinks industry in the premium product category. Nowhere is this more evident that in the Irish whiskey sector where the value of exports recovered by 25%, with total exports of Irish whiskey worth an estimated €855 million. Irish whiskey has been the fastest growing spirits category in the world over the past decade with 140% growth between 2010 and 2020. In February 2020, just before the onset of COVID, the 12-month rolling total for Irish whiskey sales broke 12 million cases. For the calendar year 2020, 11.4 million cases were sold, a slight decrease on 2019 primarily due to a collapse of Irish whiskey sales in global travel retail due to COVID.


We expect to see continued growth in the market underpinned by strong global demand for Irish whiskey. According to the Irish Whiskey Association, global sales of Irish whiskey rebounded in 2021 and are likely to exceed 13 million cases for the first time ever. The Irish Whiskey Association, the representative body of the all-island whiskey industry (part of Drinks Ireland and Ibec) is currently targeting exports of some 24 million cases per year by 2030.


The industry has matured through several developmental stages and was represented until relatively recently by a few large entities such as Bushmills, Irish Distillers, William Grant & Sons and Cooley. In the past 10 years we have seen the emergence of many new independent distilleries. From only 4 operational distilleries over a decade ago the Irish market now hosts in excess of 40 new distilleries – each one purporting a unique set of propositions to foster and widen the depth of the Irish whiskey category. We have also seen the arrival of a number of large global brands entering the market to invest or acquire some of these new distilleries, including the likes of Bacardi, Mark Anthony Brands and Brown Forman. We believe the outlook for the Irish whiskey sector remains very positive with the potential for significant growth however we would raise a word of caution in that the more successful the brand the more capital intensive the business becomes. Noting this we expect to see further consolidation in the sector over the coming years.


Cantor Fitzgerald Ireland Ltd. is regulated by the Central Bank of Ireland is a Member Firm of Euronext Dublin and the London Stock Exchange.


Cantor Fitzgerald Ireland Corporate Finance Limited and any investment opportunities originating therefrom are not regulated by the Central Bank of Ireland and therefor do not benefit from any client investor compensation scheme or the Central Bank of Ireland’s Client Asset Regulations. A complaint may be referred to the Financial Services and Pensions Ombudsman (FSPO) however, as these investments are unregulated, there is no guarantee the FSPO will accept it.


Assessments of the economic impact of elevated geopolitical risks including conflicts, tensions between states, economic sanctions, potential sovereign defaults, and the Covid-19 pandemic on investments are not possible at present. These risk factors may negatively impact on the counterparty default risks, valuations & investment performance.