The Lakes Distillery to be acquired by wine company Nyetimber in £46m deal

Spirits maker and visitor attraction The Lakes Distillery is set to be acquired by sparkling wine producer Nyetimber in a £46m deal.

The single malt whisky specialist, which set up 13 years ago and has offices in Newcastle, has ambitions to become an internationally leading spirits brand – and Nyetimber says it wants to accelerate a 10-year plan to scale up production at the Cockermouth distillery to at least 500,000 litres per year, up from around 370,000 litres currently. The offer from £13.8m-turnover Nyetimber – owned by Dutch entrepreneur Eric Heerema – gives The Lakes Distillery an enterprise value of £71m.

But the move could herald changes including the potential relocation of its Newcastle base, which is home to 25 staff, and the possible closure of the distillery’s bar and restaurant, which employs 12 people, in order to accommodate the expansion. Nyetimber says it expects to conclude a review of the business within a year of its acquisition, before firm decisions are made.

The Lakes Distillery was set up in 2011 by co-founders Paul Currie and Nigel Mills, both of whom are shareholders. Since then it has established a range of whisky, gin and vodka, and driven thousands tourists to its visitor centre, shop and restaurant on the banks of Bassenthwaite Lake.

As early as 2018, bosses eyed an IPO but plans were paused. In recent years the business having been successful in attracting more than £30m in investment, including from a crowdfunding campaign.

The Lakes’ board recently approved a plan to reach 1% of the global global luxury dark spirits market by 2030 – an ambition that requires £10m of funding over the next three years, including £3m in the coming months to service the distillery’s debt. In the year to the end of June 2023 the distillery reported net revenue of £5.7m and operating losses of £2.2m.

James Pennefather, CEO of The Lakes Distillery, said: “The Lakes board is enthusiastic about its ambitious new 10-year plan to achieve a 1% share of the global luxury dark spirits market by 2030. This plan entails an additional funding requirement of £10m over the next three years to provide the necessary growth capital to increase production capacity, to further invest in laying down maturing spirit stocks and to grow the brand’s footprint in international markets. The offer by Nyetimber offers the prospect of an owner with the same shared strategic vision and crucially, certainty of funding.

“By joining the Nyetimber family of companies, The Lakes will benefit, in particular in terms of quality of production, brand marketing and routes to market. The Lakes directors are confident that this will confer significant benefits to The Lakes’ long-term prospects both as a brand and as a company and the Nyetimber offer, which values The Lakes at an enterprise value of approximately £71m, equivalent to a multiple of 12.2 times net revenues for FY23, represents not only the best way to ensure that The Lakes remains fully funded but also provides fair value for existing shareholders at this stage in The Lakes’ growth journey.”

Nyetimber is a renowned wine producer, founded 30 years ago, with 11 vineyards in the South East producing Chardonnay, Pinot Meunier and Pinot Noir grapes. The business was acquired in 2006 by Dutchman Eric Heerema, heir to the Heerema Group offshore engineering company

Mr Heerema added: “We are excited by the prospect of acquiring The Lakes, the leading English distiller of premium quality single malt whisky, gin, and vodka. We believe that this potential acquisition represents an opportunity for us to expand our capabilities, drive exciting new growth and support The Lakes in delivering on its ambition to be a globally recognised spirits brand. Not only do we have an inherent understanding and strong relationships with the world’s leading luxury restaurants, bars and retailers, but we also have a shared strategic vision.”