Daniel Szor - CEO & Founder of Cotswolds Distillery

Introduction

This is the Cotswolds People Podcast brought to you by Alastair James Insurance Brokers.

My name’s Alastair and throughout this podcast, I’m going to be speaking with a variety of very special guests from the worlds of business, sport, music, literature, politics, and many more, all of whom have a connection to the Cotswolds area of outstanding natural beauty.

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This week, I chat with the CEO at the Cotswolds distillery Dan Szor. The distillery itself is located in Shipston-on-Stour, and it places its whisky production at the heart of everything it does at the distillery using barley that has been grown only here in the Cotswolds. The distillery also produces its own Cotswolds dry gin, but it is the whisky and the distillery’s commitment to using locally sourced produce, which, as you’ll hear is something Dan is particularly proud of.

Dan:

All of our whisky is made using locally grown, Cotswolds grown barley, which is very different to what you might find up in Scotland, where people will rather quickly tell you on a tour where their malt comes from as in the maltster who malted it, but when you ask where they got it, in other words which farms, they really won’t know. The whisky used in scotches, it’s big business, these are Diageo, Pernod Ricard, these huge companies and the barley comes from farms, not just all over the UK, but all over Europe. Whereas our idea was that we wanted to make a whisky that was truly 100% Cotswolds and using Cotswolds grain.

The problem with that is it’s very contingent on Cotswolds’ weather. For example, last year was all right. The year before was really horrible and it was difficult. Luckily our farm and the farmer that we work with did a good job and he got his crop in at the right time. And so the ‘18 harvest was okay, although very expensive because it was one of the only ones who had a decent harvest. ‘19 was much better, and we’ll see what ‘20 is like. We use a fifth generation farming family, called The Greens that farm, they’re tenant farmers on the Blenheim Estate. So they’re in Coombe, so about five minutes out of Woodstock, and so it truly is Cotswolds grown barley, which is very nice.

Alastair:

Yeah. And so what was the attraction of the Cotswolds to you? Obviously you’re not from the area originally, how well aware of the area were you? Did you just stumble across it? What was the story?

Dan:

Gosh, well, the first time dates back to probably around the early 90’s, when a very good friend of mine, American guy, went off to do a year of uni in France and ended up meeting a girl from Chipping Norton, as you do, and falling in love. And they ended up getting married here, well the strangest thing is they got married in Chipping Norton, but then the reception was at the home of a woman who lived in Stourton, which is the village that we’re in. And so I was standing, what is that, 25 years ago, probably about 300, 400 meters away from where the distillery is.

And I was a young American guy working on Wall Street, basically, if you had told me that 25 years later, I’d be living in the middle of nowhere, three miles to the East and making whisky 400 meters away I would’ve never believed it. But that trip was the first time I got to know the Cotswolds, but then I moved from New York, not to Britain, but to France. I lived there for 11 years. And then after that, I moved, via New York for a year or two, to London. And I had remarried, my wife was English, and we both loved the Cotswolds and we both wanted to be able to… We both had pretty crazy jobs, she’s a consultant neurologist in a big London hospital. And we really wanted to spend weekends in nature, basically, in a more natural setting and get out of London. So we found a beautiful, really isolated sort of barn conversion on two acres of land, surrounded by 600 acres of farm that we don’t own, we just sort of sit in the middle of it, and it was the perfect weekend getaway.

Neither of us ever imagined us living full time out here. We thought that we were city people who thought the country was what you do from Friday to Sunday kind of, but we just slowly just fell more and more under its charms, and really were… And Sunday nights got to be very depressing, to have to go back into the city, into town, and wait five days to get back out here. We just wanted to live more of our lives out here. And then the firm I had worked for, for nearly 30 years, did me the favour of going out of business and forcing my hand on deciding whether I wanted to stay in the business I was in, which was currency management, which wasn’t particularly exciting to me, or do something that really was a passion.

I’d always had a passion for single malt whisky. So the idea for the distillery came actually literally on a summer day in 2012, looking out on what was a field of spring barley planted outside my bedroom window. And just the idea of putting together two things I love, which is whisky and the Cotswolds. And I thought with all this barley growing hear, why hasn’t anyone ever made any whisky. The 30 million visitors a year kind of came into it and thinking we could make a destination distillery in the same style you might find up in Scotland, where you can tour, and see it, and understand the process, etc. That’s how it all started.

Alastair:

Brilliant. I was going to say, actually, it was my 40th, literally about a month ago, and I was given a voucher for the tour and tasting.

Dan:

Oh, great.

Alastair:

At the moment, obviously, I can’t come and see you so I’m looking forward to when we can. But yeah, so from setting up, you mentioned in 2012, the process of saying, “Right, I’m going to do it,” through to it actually happening in terms of getting it all started. How big a process is that?

Dan:

Well, it’s a huge process. It starts with, when you ask yourself, if you’re ready to put your life savings into something, which you have no idea will work or not. And whether you’ll, given my exquisite lack of experience in making whisky, I only knew as much about making whisky as somebody, a whisky geek who had been on a few dozen whisky distillery tours up in Scotland would. And so it begins with whether you’re willing to, quite literally in our case, bet the farm on it, which bizarrely I was and my wife even more bizarrely was willing to support me in it. But then it continues on to… I think what’s really important is the total humility of realising you don’t know what you’re doing and you’d better damn well get some good help, and we were very lucky. We got some of the best help you could possibly get.

We got to two Scottish gentlemen who between them had 100 years of experience in making whisky. One of them, a gentleman by the name of Harry Cockburn, who was 77 years old at the time and had a 50 year career in the whisky business. Harry had run the Bowmore Distillery up in Islay, and he was retired and helping start up distilleries as a consultant. And he was engineer in my background, so he understood all the things about the process, because this is ultimately an industrial kind of a process. The other gentleman was a guy by the name of Jim Swan, who sadly passed away two years ago, but Jim, where Harry was the engineer, Jim was the chemist. And they used to call him the Einstein of whisky because he understood the chemical interactions between whisky and wood, how to best age whisky, how to best make whisky that will give you the flavour profile you’re looking for, and so we have Jim to thank for helping us to create a whisky, which we hope is a real reflection of the Cotswolds. So the feel, the flavour of the Cotswolds.

Alastair:

And so if somebody said, does the Cotswolds specifically have a taste, how would you try and describe the “Cotswold taste”?

Dan:

We think there’s definitely taste to the Cotswolds, the house style of our whisky. We had the luxury of being the first ones ever to make whisky in the Cotswolds. So we sort of got to decide what a Cotswolds whisky should taste like. And I kind of thought, well if you have some of the super peated Isla malts, which are wonderful, and especially if you’ve been on Islay particularly on a blustering day, and you completely get it.

But we don’t have the peaks, we don’t have the crags, the glens, the crashing surf, the cliffs of Scotland, it’s a less dramatic scenery, but it’s equally beautiful in its own way. It’s more of almost like a Turner painting or a Monet. I mean, it’s an impressionist landscape. So I felt that the Cotswolds whisky ought to be approachable, and gentle, and it ought to reflect what is grown in the Cotswolds, and what’s grown in the Cotswolds is largely fruit and cereals. So fruit and grain were the notions. We wanted to make fruity whisky, but we wanted it to be rich and full in flavour, and Jim Swan showed us how to do that, basically.

Alastair:

Do you find, is there a bit of, you mentioned about obviously the Scottish whisky, diehard people, is it trying to show that you can compete with the Scottish distilleries? Is that ever a challenge?

Dan:

No, we’re not trying to compete with a few hundred years of history and heritage, and most importantly of late, to the corporate money that’s gone into making scotch whisky a global luxury brand, as opposed to what most of those beautiful little whisky distilleries in the Highlands were when they started out, which were farm distilleries. I mean, whisky making started out as a job done by farmers who had extra crop, and what can you do with that crop? Well, you can malt your barley and you can make beer out of it, but that only lasts so long, but if you distil that and take the spirit out of it, it’ll last forever and it’s a great store of value. So whisky making was originally a farm based business, and on our beautiful site here, we’ve got four acres, it’s a former farm, and it sort of looks the part.

And what we do here is we make whisky the way you might’ve seen it made in Scotland about 50 years ago. That is with no computers, no technology, with a bunch of guys who have gone from never having made whisky in their lives to becoming really true artisans, true craftsman, and doing everything by hand. And so what we find is that, those Scots really in the know, whether they’re in the business or just folks who know their whisky, they come down and they see what we’re doing, usually they’re pretty charmed by it all. And it’s, again, it’s done with all homage and respect to a great tradition of making whisky. We don’t want to rewrite the book on that, but we do want to make whisky the way whisky was made before it was made by a bunch of PLCs doing it mainly for the P and L of it.

Alastair:

And what do your friends back home make of it, when you said, back in America, when you were coming here and doing the whisky, what have they made of it all?

Dan:

Well, actually, my best friend was kind of my partner in crime. He was my whisky buddy and we would sort of do a boys trip once a year. I’d go up to Scotland, kind of like that film Sideways, two sad, middle aged men driving around and drinking booze. That was when you could do that, but so we both went on this journey of discovering whisky, and what whisky could be, the different horizons, and the types of flavours, and the sense of terroir and provenance.

So I don’t think he was all that surprised, but I think a lot of others maybe were. I did have a nickname that was given to me by the folks I used to work with, and that was Mr Coca-Cola, because I was the guy who was always very consumerist in his marketing strategy for something that wasn’t very interesting. It was an algorithmic currency trading system, but I guess I always related better to things on an emotional level. So for me, this is sort of the best you could ask for it, because I can be out there communicating the values of something that I really believe in and I really love. And thankfully, even when no one’s looking at night and I go and grab a little dram after dinner, and I got about 200 bottles, I could pretty much drink what I want, I’m always going for ours, because I’m actually making a whisky that I would want to drink, which is what I dreamed of being able to do.

Alastair:

Well I was going to ask that. When you set up, did you say, this is the taste I want, and I’m going to produce it? How much of it is that? And how much is you’re looking at the market and tailoring it towards that? It sounds like you were very focused, “it’s a Cotswolds whisky, and that’s how it’s going to be”.

Dan:

Well, I’d love to say that I looked at the market, and traditionally, that’s what you do when you launch a consumer brand is you do a market analysis and all this kind of stuff. And this was all stuff I didn’t know how to do. In fact, I tried tell to people, I didn’t know I was going in the drinks business, which I was. To be an entrepreneur it takes a rare combination, I think, of courage and complete ignorance. And I just wanted to make a whisky that I would be proud of and that I would want to drink. And that’s harder than it sounds because I had visited a lot of craft distilleries in the States. Craft distilling in kind of small scale, took off about 10 years earlier in the States than it did in the UK.

And I went around and visited a lot of them and they had great stories, and great looks, and great people, really interesting, really wonderful. And then you would taste the whisky and it was just like, “Eh, no, no. I just… I wouldn’t…” and it goes on the back of the shelf and you never touch it again. And that’s really why I wanted to make something that I would actually really want to drink. And I think I’ve got a… I don’t have a strange pallet or a very unique palette. I think what I like most people sort of like, and we’ve managed to do that.

We didn’t know that at the beginning though, that’s the thing, when you start making whisky, you’re making what’s called new-make spirit, it’s un-aged whisky. It’s clear, colourless, and it doesn’t taste like with a finished product. It takes a few years in the wood for it to become the taste of whisky. So when we first made the spirit, we had no idea whether or not it would make good whisky. And it took us about three or four months, in the fourth quarter of 2014, to really get it right, and it was with Jim Swan’s help. And by Christmas of 2014, we had made a new-make spirit, which was genuinely delightful, and in fact, actually, we’re so proud of it, that you can buy our new-make spirit at 63.5 ABV. So it’s pretty hairy, pretty punchy. We call it White Pheasant because it’s white dog in the States for moonshine, and so for us, it’s Cotswolds, it’s White Pheasant.

You can buy that on our website and not many people would necessarily drink it neat, some might. Northern Europeans seem to like that sort of pure alcohol taste, but it lets people see… People ask us, “How can you make a good whisky that’s three years old? I thought whisky had to be 10 years old or 15 years old?” And so that’s what the Scots would have you believe, but actually if you take really good quality spirit and you put it into really good quality barrels, you get a really good whisky in three years. So that’s how we did it.

Alastair:

And then I just… I guess that’s the hard thing, I guess, about whisky, when you set up a distillery, isn’t it? It’s not production then you can start selling straight away. It’s a long process, isn’t it?

Dan:

Oh yeah, financially it’s not something I would wish on my worst enemy, to be honest. I mean, when you talk about working capital cycles of 60, 90 days, 100 days, this is a five year working capital cycle. So you’re making stuff you won’t be realising the benefit of in any way for years, and years, and years. But thankfully, that’s where gin came in, and gin was the biggest surprise of the Cotswolds’ facility because it was not something for which I would have built the distillery. I liked my G’n’Ts, but I wasn’t sort of gin crazed. I was whisky crazed, but we thought not everybody is a whisky lover and we should have other things, particularly things don’t take three years to age, and things that we could put on our shelf in our shop if we start to run tours and whatnot. So we started making gin about the same time we started making whisky in Q4 of 2014, and to our great surprise, our gin sort of went viral.

We ended up getting a listing. Our first listing was from Fortnum & Mason, and it came within a week of the first spirit coming off the stills, and then Harvey Nichols followed suit, then Majestic offered us a regional listing, which eventually became semi-national, international listing and on, and on, and on. And now we’re in Waitrose, Ocado, and Amazon, and all these places, and we’re in 40 different countries. That gin really, it helped us a lot because of the cash flow, obviously, you can sell it right away. I mean, you can make it on a Tuesday and sell it, maybe not quite on the Wednesday, but it’s about a one to two week process. And we came up with a very original recipe that is very botanically intense. So it’s a more sort of pungent and aromatic gin than most and very creamy in texture. And of course we were helped by the fact that gin as a category has seen growth over the last few years in this country like it’s never seen before, a true Ginaissance, as they say.

Alastair:

Yeah, and that’s all locally produced as well. I’ve seen on your Facebook page, a couple of Ollie’s videos, he’s out in the countryside talking about all the local produce that goes into it, so quite fascinating, actually.

Dan:

Absolutely. Actually, we can’t source all our botanicals locally, peppercorns, that’s one of our botanicals, black pepper wouldn’t grow here, nor would grapefruit, particularly well, and the lime. But there is one of the nine botanicals in our gin is as local as you can get and it’s Cotswold lavender, which comes from the beautiful Cotswold lavender farm on Snowshill, just above Broadway. An incredible place to go, particularly in a few weeks, so they’ll be harvesting usually at the end of July and really worth a visit. It sort of feels like you’re in the South of France, but you’re actually up on the high world right above Broadway. We get our lavender from Snowshill and then otherwise everything is made at the distillery and it’s very small batches.

And that original idea we had of getting people in to see the distillery has turned into 30,000 people a year. So we run three tours every day, seven days a week, and they’re all pretty much booked up. That was pre-coronavirus. We’ll have to start that up again very slowly as and when it is safe. We are hoping to reopen our three shops. We have the distillery shop at the distillery, and then we have a shop in Bourton-on-the-Water, and we have one in Broadway now, and we hope to open all three of them in time for the weekend of the 4th and 5th of July, I think it is, or 3rd and 4th of July. And then who knows, maybe the cafe. We built a new visitor centre last year, which is beautiful, here at the distillery, and it has a really nice cafe, and we hope maybe that’ll be up and running by the end of the summer so we can still get a few weeks in the summer.

Alastair:

Brilliant. And the tour and tasting, which hopefully I’ll be able to go on soon, that’s whisky and gin is it, for people that want to come?

Dan:

It is. It’s all together in one small… It’s all under one roof. So we have our two gin stills, Lorelei and Dolly, and our two whisky stills, Mary and Janis, it’s traditional to name stills after ladies, ours are all musical ladies. There’s a story behind each one of them, and you can see both of those, and you can see the whisky warehouse, and see how we bottle through the windows of our bottling hall, and then it ends up in a beautifully appointed tasting room where the sky’s the limit in terms of what you can taste and those who drive can even bring home what we call a driver’s dram.

Alastair:

Well, it was my birthday treat, so I definitely won’t be driving, I don’t think, that time! And you touched upon coronavirus, how has that affected your production as well? Is that a big impact on you or have you managed to muddle along or get through it?

Dan:

We’ve been certainly luckier than some in certain industries. I mean, we’ve had our difficulties, obviously again, the three shops have had to shut down, and no tourism, and that was a big part of our revenue. On the other hand, that’s been made up for by very, very strong sales on our website. So we have an online store where people can buy pretty much all of our spirits, including what we call distillery exclusives, which are spirits, which are not sold and in the trade, so to speak, in the shops, but just by ourselves. Fun things like Limoncello, Summer Cup, Whisky Amaro, some whisky liqueurs, etc. And those are all available on our website and that’s definitely helped. And then in terms of our wholesale business, of course, the bars, restaurants, and pubs have not been ordering of late, but the shops have been ordering.

We’ve kind of, one’s made up for the other. And a lot of the staff that are involved in the hospitality end of our business have been on furlough, but we are looking forward to having them back with us in July. And everybody who is… We’ve continued to make whisky and gin in bottles, so our production has been going on and everyone who’s been non-essential has been – non-essential to production I should say- has been working from home. So basically all of our sales, marketing, and admin have been from home and that’s worked very well, but I will say, I’m actually speaking to you from the distillery, I nipped in here for a meeting a few minutes ago. I only live three miles away and it’s really nice to be back here.

Alastair:

Yeah, I think everyone’s figuring that out now, aren’t they? I noticed a lot of this is trying to get back to some sort of a normal if they can.

Dan:

Exactly.

Alastair:

On the whisky, from my own industry, obviously working in insurance, whisky is one of those areas, certainly for collectors, where the value is going up a lot actually lately, people having new valuations done etc. What do you think the reason is for that? It seems to be a global increase, not just in England and Scotland, that’s seen across the world. Why do you think the reason for that is?

Dan:

Well, I think it’s that it’s the same as you would have for any sort of luxury item, which is limited in supply. And it’s quite collectible, it’s become quite a thing over the last 20 years to collect whiskys. It’s something which one can have as an investment, but one can also offer one’s friends as well. Very often people will… What’s the saying? You buy three bottles, one to drink, one to collect, and one to share with friends. I have never really been personally that sort of whisky fan. I kind of have always felt that an unopened bottle of whisky, is a bit of a sad thing, it’s meant to be enjoyed. So the rare, expensive bottle that I’ve had has not lasted very long, because if it’s good, then eventually it comes out for company, the good company, the ones you would offer, the people who will appreciate it.

Dan:

We’ve always felt that it’s important to keep a very sort of affordable pricing strategy. You’ll see a lot of new whiskys coming out, which are over a 100 pounds, which we just feel for a young whisky… I understand the financial difficulties that new whisky makers have and why they would price it that way, but I think it’s really important to keep both your flavour profile and your price approachable. So that’s what we believe in. And unfortunately, we’re still pre-profit as they say, it takes a good 10 years, really to turn a profit in whisky. It’s a long-term business. So yours truly won’t be buying any of those expensive whisky bottles anytime soon, but I’m very happy that I have a good supply of my own to drink.

Alastair:

Exactly. Yeah. And celebrate when it does all get back to normal, no doubt. But it sounds like you’re very much in it for the long game, I suppose. So when you get to that 10 years, is that the sort of mark where people start to commit more maybe? You say the three years still people consider it very new, don’t they? Whereas 10 years… Is that the milestone people want to get to?

Dan:

Well, to be honest, I don’t think that’s going to really be the case with us, because we’re such a believer that age is a bit of misnomer and at a marketing tool, and that you can have 10 year old or 15 year old whiskys that you like less, that you fancy less, than the three year old whisky. We decided it would be disingenuous of us, even if we were at 10 years, to be flaunting a number, which is frankly, a number that’s much easier for those who’ve been around for 100 years to throw out there, even though their production techniques might not necessarily be as quality focused as ours. So our whisky is what they call NAS - No Age Statement - but it’s very clear for everybody to see, because it says on the bottom on every bottle, established 2014, when we got started.

So we’re not trying to pull the wool over anyone’s eyes, but we do think that it’s just… What’s going to create the bigger demand for our whisky is a greater number of people being exploratory in their whisky tasting, looking for new things, looking for different things. There’s a whole category, which is growing quite fast, called world whisky. And that’s basically whisky not made in the traditional places like Scotland, Ireland, Kentucky. It’s whisky that might be made in Taiwan. There’s a great whisky distillery in Taiwan. Japanese whisky now is actually an established thing. There’s, I think, over 20 whisky distilleries in Tasmania and Australia. There’s great single malt being made in the Netherlands, and France, and Denmark, and Sweden, you name it. And that’s a group that we’re very conscious of wanting to be a part of, but what’s even more exciting is that they’re actually English whisky is going to become a thing. It’s not something I knew or expected when I built this, but I wasn’t the only person to have this idea. And as we speak, there are now 25 distilleries in England making whisky.

And at that size you have a category, and we actually, and one of the nice things about this business is we may compete a bit on the shelves, but actually we’re quite close to one another, the distillers, and we’re talking about actually creating an English whisky sort of guild or association to work in common and in conjunction with one another to promote the category of English whisky. So I think that rather than it being a defined timeline, it’s going to be once… This past year we had, I think two or three new English whiskys released, one from the Lake District, one from a distillery in London, one from Yorkshire, and I think that the more and more you see that the more and more people will be drawn to experiment and try English whisky, which is great.

We love that.