Mighty Craft’s audacious plan to dominate Australian whisky

It’s a tall order, but he has a few secret weapons at his disposal – a source for the all important barrels for maturation, which are becoming increasingly hard to find, a yoga retreat on Kangaroo Island where his distillers will hone their craft, and 70 of perhaps the most controversial barrels of whisky ever to be laid down in Australia.

Mighty Craft burst on to the Australian beverages scene in 2017, listing on the ASX under the name Founders First after a $15.8m million capital raise, headed up by former Port Adelaide Football Club and Carlton & United Breweries executive Mark Haysman.

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Tapping into the nation’s seemingly insatiable desire for new craft brands across beer, cider and spirits, the investment thesis was simple – buy great brands, and venues, and wrap them together into a sum greater than the parts.

Brands the company has brought on board since listing include Adelaide-based microbrewer and venue Sparkke, Jetty Road Brewery on the Mornington Peninsula, Slipstream Brewing, Kangaroo Island Spirits, Seven Seasons, founded by indigenous former AFL footballer Daniel Motlop, and in the largest deal to date, the $47m acquisition of the Adelaide Hills Group, which makes Mismatch beer, Adelaide Hills Cider and 78 Degrees spirits.

Mr Malcolm, the former chief executive of Australian Whisky Holdings, and a cornerstone investor in Mighty Craft, has now been tasked with overseeing a strategy with the stated aim of becoming one of the top three whisky producers in Australia, producing one million bottles of spirits per year by FY25, with 1.5 million litres of whisky under maturation.

To do this, the company aims to play at every price point from “everyday whisky”, to the top end at about $400 a bottle, which is where the perhaps notorious 70 barrels come in.

Anyone with a passing interest in the Australian whisky trade knows that a sentence involving the name “Nant” probably also includes the word “scandal”.

Nant Whisky, using a strategy common in the industry, had encouraged investors to put their money into barrels of whisky, at $5000-$10,000 a clip, which the distillery would then buy back after four years plus 9.55 per cent annual compound interest.

Investors tipped more than $20m into the scheme, but there was a major issue – much of the whisky didn’t exist.

This was discovered when Australian Whisky Holdings, which bought Nant after it collapsed in 2017, audited the barrels and found that there was a modest amount – about 5 per cent – which could be considered A-grade, while a large proportion was of poor quality and many barrels were not filled at all.

“We bought Lark, we bought Overeem Whisky and then AWH bought Nant Whisky and I spent three years clearing up that mess,’’ he said.

“We were the first ones to go in there and audit the whisky, in every way, we photographed the barrel, weighed the barrel, tasted it, traced its history back to whether the barrel existed or didn’t exist.

“I worked with the Australian tax office to give them information, then the Tasmanian police force to tell them what had gone on.

“But in doing that I came to understand the best of the Nant barrels.”

Mr Malcolm said that last year Lark, formerly AWH, declined an option to buy some barrels which were still outstanding, so he bought 70 of them, which in a joint venture with Mighty Craft will be the cornerstone for the Hidden Lake brand, at the super-premium $400 bottle end of the range.

While the rest of the Mighty Craft range lacks quite the same backstory, the distillers are working on interesting projects, with 78 Degrees producer Adelaide Hills Distillery’s Sacha La Forgia winning World’s Best Whiskey earlier this year for his $450 per bottle Native Grain Whiskey, of which just 150 bottles were made.

Made from the grain from native weeping grass, it is, the company believes, the only product of its type on the market.

“He’s developing another couple of whiskies there as well, Mr Malcolm said.

“I like having different brands in a public company because I think you need diversification and spread.

“Mighty Craft has become that animal you want.’’

Mighty Craft is developing a whisky through Kangaroo Island Spirits: “The new still goes in there in February’’.

“We’re producing a whisky at Adelaide Hills – 78 Degrees which is an everyday whisky.

“We’re developing a whisky at Seven Seasons which is the aboriginal brand and that is exciting.’’

Former AFL star Daniel Motlop sold a majority stake in his Green Ant Gin label – now known as Seven Seasons – to Mighty Craft in 2020, for $400,000, with that label also now putting out a bush apple gin.

The price points step down through Hidden Lake at the extreme upper end, premium whiskies from Kangaroo Island Spirits and Seven Seasons, complemented by a “beautiful, everyday whisky” from Adelaide Hills Distillery,’’ Mr Malcolm said.

“We’re trying to offer a broad spectrum,’’ Mr Malcolm said.

All of this activity creates its own issues, particularly in terms of the supply of barrels, which are vital for whisky maturation, and in terms of getting the distillers to make the stuff.

On the barrel front, Mr Malcolm, recognising the growing global shortage of barrels suited to whisky maturation, has invested in three companies in the barrel businesses, including Adelaide’s Australian Coopers, and also is a part owner of QIP, which is also involved in research and development.

“We’ve got a world patent in that company for seasoning barrels,’’ Mr Malcolm said.

That expertise is helping the Seven Seasons brand develop both a bush honey whisky, as well as a paperbark whisky.

“Daniel Motlop who is an owner in that company along with Mighty Craft comes from Arnhem Land, and he asked us to develop this barrel which has a paperbark smell and flavour,’’ Mr Malcolm said.

“And when he smelled the barrel, he just said ‘it smells like home’’.

On the skills front Mighty Craft has also taken an innovative approach, buying a yoga retreat on Kangaroo Island which by about the middle of 2022 will serve as an education centre both for its own staff in training, and members of the public keen to learn the craft of whisky making.

“We’re going to be putting cabins on that that people can live in. There’s going to be training courses both for the public but for our own people as well, so we will train them through whisky, gin and vodka, and develop the experience of our own people.’’

The company has also brought in George Campbell as head distiller following stints at Glenfiddich and Balvenie, who arrived in Australia in recent months and is now based on KI getting the new still up and running.

In terms of his own role, Mr Malcolm accepts the elder statesman title, and his belief in the company extends to being the cornerstone investor in a recent $5.8m capital raising.

“I’ve got confidence they’ve got a great future.

“I learned very early on in my career that nothing’s overnight, especially whisky, you’re taking three to five years in growth, but my role there is to develop strategy for the spirits side of the business.

“Mentoring those guys and helping them take the business to the next level is what I do.’’

Adelaide

Cameron England has been reporting on business for more than 18 years with a focus on corporate wrongdoing, the wine sector, oil and gas, mining and technology. He is a graduate of the Australian Institute of C… Read more

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