Chris Malcolm has had an incredible 10 year journey with Australian whisky, from Executive Chairman of Lark to CEO of Australian Whisky Holdings (AWH) and now Chairman of the Spirits Advisory Board at Mighty Craft, he has been at the core of many key Australian whisky brands.
Malcolm was in his CEO role at AWH when the Nant Barrel Investment Scheme collapsed and has talked in detail to The Shout about what happened, and beyond that, about his love for Australian whisky. Despite the disappointments of what happened at Nant, Malcolm’s passion has endured and is evident when he talks about what’s happening at Mighty Craft.
“I think Mighty Craft is a sleeping giant,” Malcolm told The Shout, “that’s because it’s broad. We do beer, we do cider, we do venues, and I’ve just been appointed as the Chairman of the Spirits Advisory Board. I’m leading the team in developing the spirits side of the business, and they’ve got five or six brands of whisky. It’s amazing. So that’s a real opportunity to be another Lark, if not even bigger.
“I love the whisky industry, they’ve got fabulous brands and I like creating a brand and getting it to a point where it can grow and flourish. That’s what Mighty Craft have got me doing in the whisky side, but also with their gin and vodka. But also Mighty Craft is one of those inclusive organisations, with good young people and I can help mentor them, and that’s a really exciting part of this journey.
“We’ve got a plan to really accelerate the whisky side of the business, we’re growing spirits overall, but we’re focusing on whisky for the next few years and that’s part of my leadership there. By 2025 we want to have about 1.5 million litres of whisky under maturation. So we’re busy buying new stills, installing new stills, busy training people, bringing in talent.
“I brought in for Mighty Craft a few months ago, George Campbell, fabulous young guy from Scotland with his fiancee, Josephine. His last gigs were with places like Glenfiddich and before that Balvenie, and he was part of the fast-track Diageo management program. And he’s now head distiller for the group, so having the opportunity to mentor a young guy with great experience, who is a fabulous person, I find that exciting.”
Looking at where Australian can develop to in the years ahead, Malcolm said that the worldwide resurgence of whisky has helped, and Australia has always punched well above its weight with exceptional quality whisky for its size.
THE NEXT LEVEL
He said: “It’s because we’re small and because everybody that’s made whisky was an owner-operator who have always been so passionate about their whisky, but sometimes they don’t know how to make a dollar.
“So what happens is, guys like me with corporate experience, who are passionate about whisky and people, come in and say ‘hey, guys, we can we can ramp this thing up over the next few years’. People think that Lark is an overnight success in the last six months, but we’ve been at it for seven years. Just getting it into a public company took me two years, and that’s the vehicle they use today.
“So you take passionate people making whisky, you help to take them to the next level, and that’s what I’m doing with Mighty Craft.
“George coming in as Head Distiller will help us ramp up our production and quality quite dramatically as we bring in the new stills.
“Within the stable we’ve got Kangaroo Island Spirits, and they have whisky coming, Sacha makes a great everyday whisky and we’ve got plans to develop that distillery further, there’s huge opportunity with Seven Seasons.”
Sacha La Forgia is Head Distiller with Adelaide Hills Group, which is now part of Mighty Craft and he recently described Mighty Craft’s whisky program as ‘the most important whisky program in Australia’.
Malcolm also said the company has Hidden Lake coming out of Tasmania.
Hidden Lake is a joint-venture between Malcolm and Mighty Craft that at present is buying and laying down whisky from independent distilleries, to enable Mighty Craft to have a Tasmanian whisky ready sooner rather than later, with sooner being early next year. The Hidden Lake brand will be putting out bespoke single cask whisky, while Devil’s Run will be a blended Tasmanian whisky.
Part of Hidden Lake’s library of casks will include 68 Nant casks bought by Malcolm, and he explained to The Shout how that came about.
“Not a lot of people understand what happened at Nant,” Malcolm said. “Barrel investors fell into two categories, either Keith Batt never filled their barrels, in which case they lost out, and it was heart-breaking for me when I dealt with those people. But then the other half had whisky, and they had a contract to sell it back to a management company, that Keith had.
“AWH acquired the rights to that management program, which meant they could buy back the whisky when people wanted to sell it. I spent millions of dollars when I was CEO at AWH buying back whisky at the full contract rate. But what happened last year is that Geoff Bainbridge [current Lark Distilling Co CEO] decided he did not want to buy back the balance because he didn’t want to be involved anymore. So Lark went out to the barrel owners and said ‘here’s an offer to buy your whisky, if you don’t want to sell you’ve got three months to remove it from our bond store’.
“That caused a huge panic and investors wanted to sell and a number of groups got investors themselves and bought a bunch of barrels and I picked up 68 barrels and that’s forming part of the early product in Hidden Lake.”
NANT INVESTMENT SCHEME
Malcolm went on to explain his perspective of what happened with the Nant Barrel Investment Scheme.
“I became CEO of AWH, which was the public company and I spent two years backdoor listing Lark into AWH in order to make it a public company. That’s what we did and we had a public company vehicle. During that time AWH purchased Nant. We purchased the assets of the business rather than the businesses and I was the first one that audited that business.
“I appointed Tim Duckett of Heartwood Whisky and Mark Nicholson to do the audit for me on Nant and I was the first person to present that to the Australian Taxation Office, and that’s the first time they ever knew what Keith Batt was doing.
“I spent three years working that mess out. We collated all the paperwork regarding the barrel investors and we linked that to the electronic trail of all the investors and then we presented that to the police and AWH have done a lot and spent millions cleaning that up, which a lot of people don’t understand.”
So what is it that Malcolm alleges happened at Nant?
“This is how Nant worked under Keith Batt. Keith would say to you (and let’s just pick the numbers here these are different to exactly what happened), ‘buy a 100-litre barrel of my whisky for $5000. I will buy it back on maturity at 9.5 per cent compound interest’. In three, four, five years’ time the whisky matures and Keith comes to you and says ‘the whisky is now mature, I want to buy the whisky back, and I’ll pay you the $5000, plus 9.5 per cent compound interest.’
“It works really well, and it has worked successfully at a number of other Australian distilleries.” The problem Malcolm alleges “he sold too many barrels that he could never fill because his capacity to make the whisky was not there. He got hooked on the drug of cash.”
Malcolm told The Shout: “He was selling too many barrels. Let’s say the distillery could produce 500 barrels a year, he was selling 1500 barrels a year to investors, so he could never fill the barrels he was selling.
“What then happened is his cash ran out, his money dried up and he had to sell the business to somebody, we were that somebody. We said ‘we don’t want the business, we’ll just buy the assets’. That’s when people then found out that if they had bought a barrel they fell into two categories, either he filled it and they had a barrel, or he hadn’t filled it and they were never going to get a barrel.
“So what I did as CEO of AWH was that for those people who had barrels, and there were a couple of thousand of those, we bought back the barrels from those people, and that continued until this year when Geoff decided he didn’t want to be involved anymore.”
The Nant scheme is a dark cloud over Australian whisky, but with companies like Mighty Craft investing heavily in quality and quantity the future looks bright.
Malcolm has enjoyed and endured his 10 year journey in the industry, so what does he love about Australian whisky?
“Let me put it this way. When I use my iPhone, I’m terrified of making a mistake. I press the buttons and I’m always afraid I’m going to do something, or lose something. When I watch my kids, they just press everything, it’s like ‘we can’t break this thing, let’s just figure it out. If we lose it, then we’ll just start again.
“I look at that attitude and that’s what I see in Australian whisky. I see that Australians are not frightened to play with it. Sometimes they play with ignorance because they maybe don’t fully understand what they are doing, but they want to have a go. I just find that to be so creative, so innovative.
“Sometimes you look and you think ‘what the hell are you doing, why would you do that?’ But they keep going, they keep playing with it, even if they break it, they keep playing until they’ve got something good and that’s what I think is exciting about Australia.”