After a decades-long career in the corporate world, Gareth McAllister struck out on his own and built Ahascragh Distillery on the ruins of an old Galway mill. Now with investors on board, he’s turning his attention to the lucrative Asian market, writes Nick Mulcahy

A corporate career can be very rewarding in terms of earnings, though with multinationals it’s often the case that you have to move around the world to progress. Then in middle age you may find that your employer has a new owner and that you have two choices: stick with the programme and get to know the new masters or jump overboard to try something new.

Gareth McAllister (54) chose the latter course of action. A few years ago, the chemical engineer returned to Ireland from Hong Kong with the ambition of starting his own whiskey business. His base of operations is the small village of Ahascragh in Co. Galway, 11 kilometres north of Ballinasloe.

Ahascragh was established in July 2018 by Gareth McAllister and his wife Michelle, who moved west from their Portmarnock home in Dublin to oversee the ambitious development of their distillery.

Distilling whiskey doesn’t have to be complicated. All you need is copper stills to distil the alcohol and then some barrels where the alcohol matures into whiskey. The process can be effected in any industrial estate but the McAllisters decided that their site should be a derelict mill in a rural village, which they have had to rebuild practically stone by stone and then repurpose to accommodate the distilling equipment and machinery.

Separately, and in the same village, the McAllisters have acquired abandoned shop premises, one for their office base and another for their whiskey warehouse.

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Gareth McAllister insists there is method to their madness. “Developing the distillery in a business park would probably cost us half as much and we’d be up and running by now,” he says.

“But it wouldn't be as nice to visit as what we have in Ahascragh. Hospitality is a big part of our mission, somewhere family and friends can celebrate meaningful moments and occasions. It's not just about the liquid and the spirit - it's also about creating a destination for people to come and see.

“When we came across the overgrown mill, Michelle described as a hidden Narnia. It's a protected structure but the layout suits a distillery. The mill used to process grain into flour and now it’s going to process grain into a liquid.

“The mill had two large water wheels at one stage, and we are going to restore one of them. With the hydro, the mill was powered by sustainable energy, and that fits in with our own ethos to be sustainable and green in terms of power usage.”

McAllister is also chuffed about reinvigorating an ailing village. “There are dozens of villages in Ireland that have similar beautiful buildings that have been neglected. The distillery project has completely transformed Ahascragh, and it was the right thing to do. People will come to see this and talk about it.”

Gareth McAllister comes from a generation where the only option to find employment was emigration. He graduated from UCD in 1990 and says that all but two of his classmates had to go abroad to find work. He headed to Dusseldorf for a role with Henkel, who transferred him back to Cork when their plant was being built at Little Island.

His career subsequently took him to employment with American firms, with roles in Switzerland, France, and then Asia. “Most of my career has been abroad, not by choice but due to opportunity,” he remarks.

McAllister spent 12 years with American multinational Lord Corporation, rising through the ranks to the role of president of the Asia/Pacific division. Lord is a technology and manufacturing company that develops adhesives, coatings, and sensing technologies for industrial customers. In 2019, McAllister helped with the sale of Lord to US peer Parker Hannifin for $3.7bn, after which McAllister checked out.

“I could have stayed on, or I could have gone elsewhere in Hong Kong in the corporate world,” he recalls. “I was 51 so we decided that this was the time to do something else or we'd never do it. Michelle is passionate about gin and I’m the same about whiskey, not just drinking it but everything to do with the business case study. I saw first-hand in Asia the huge opportunity for quality Irish spirits.”

The profit opportunity in making Irish whiskey is illustrated by the accounts filing for Great Northern Distillery for the year to April 2022. On turnover of €44.5m, GND booked an operating profit of €22.4m and a net profit of €18.2m.

Founded by whiskey veteran John Teeling, GND is a whiskey manufacturer and wholesaler that doesn’t sell its own branded whiskey. Established in 2015, over the years Great Northern has invested €17m in plant and machinery and €22m on casks to transform raw alcohol into whiskey. Whiskey stock on hand in April 2022 was valued at €45m.

The large capital investment required by whiskey venture is also evident at Lough Gill Distillery in Sligo, a whiskey start-up that founder David Raethorne sold to New Orleans buyer Sazerac last year. Risk capital deployed at Lough Gill at the end of 2021 totalled €16.8m.

The Ahascragh project isn’t as ambitious as GND or Lough Gill, but McAllister will still require plenty of patient investors to fulfil his vision. The Ahascragh Distillers Ltd balance sheet for December 2021 shows €3.3m equity funding. Tangible assets capital investment at end 2021 amounted to €1.3m, with €1.1m spent on land and buildings. Stocks were valued at €550,000.

McAllister funded the venture with €1.35m of his own savings, in the form of a director’s loan. The company is actively recruiting investors using the EIIS scheme, and Portmarnock investor Richard Cregan came on board with €300,000 in December 2022.

According to allotment documents, Ahascragh’s largest outside investor is Jim Rogers in Tennessee, who invested €1.5m in 2021. McAllister describes Rogers, former CEO of Eastman Chemical, as “a good friend and mentor”. Ahascragh has also crowdfunded, and this year will be seeking to raise c.€1.5m in fresh equity capital.

“EIIS is a good scheme for companies like us that require plenty of working capital,” says McAllister. “You're laying down whiskey for up to five years so essentially you're using the EIIS money and converting it into whiskey stock. We have learned to do a lot of this ourselves, as in Ireland there is no finance available from banks for small start-ups. We talked to all the banks, and nobody was interested.

“The banks are so risk averse. They will tell you to come back and talk when you’re profitable and we are not going to be Ebitda positive until 2026 or 2027. It really is a long play for investors, and our shareholders understand that.”

“If I were much younger, I might have taken the bank rejection personally, but when you're older you're wiser. You don't take rejection as a negative. You treat it as another door that has to be opened and an opportunity to learn from and all those kinds of things. Being self-aware and how you conduct yourself and understanding the world around you - you only get that with age and experience. I'd actually hate to be doing this at a younger age because it would drive me mad.

Ahead of making its own whiskey, Ahascragh has launched Xin Gin and Clan Colla whiskey, with the latter made with bought-in spirit. The Clan Colla brand name has its origins in Tullyglass outside Ballymena, which was distilled by the McAllister family in the 1800s.

McAllister intends that Clan Colla’s main focus will be in Asia. “We are developing the brands with Asian consumers in mind,” he explains. “Our Clan Colla whiskeys are mostly single malts that have an age statement, and the brand design for the gin has China written all over it.”

The entrepreneur acknowledges that there wouldn’t be an international Irish whiskey market without Jameson, adding that the blended brand has struggled to make an impact in China.

“The Chinese market is very much a gift premium space, and they are fascinated with single malts. You need to have the number of years on the label, the better for gifting. The other thing is that Jameson launched in China in their standard green bottle, and in China green is the unluckiest colour. Johnny Walker made the same mistake, launching in China with a white bottle, a colour that in cultural terms signifies death.”

Ahascragh won’t be relying entirely on its own brand development. The business plan calls for selling bulk whiskey too, just like Great Northern Distillery and West Cork Distillers. McAllister anticipates that on a five-day week schedule output will be 500,000 litres of pure alcohol (lpa) per annum, which will rise to 800,000 lpa when operations are 24/7. All going well, production can be expanded to 1.5 million lpa in a number of years.

Half a million litres of pure alcohol can make c.1.5m bottles of whiskey, which is a lot. “That would be our minimum, and that will have to grow,” McAllister insists.

Distilling whiskey requires patience, which is why McAllister is glad he embarked on the venture in his fifties. “Without the experience I've had in business, I don't think we would be where we are today in terms of the progress we've made. We've gone slow when need to go slow, and we've gone fast when that’s required. I wish I had the energy that I had 20 years ago, because Ahascragh is all consuming, and it has to be for a few years for it to work.”

Gareth McAllister and his family view Ahascragh as a legacy business. “There is not enough capacity to make Irish whiskey on the island of Ireland to meet current and future demand. That is why it is important to us to have full control of our cost base and our supply chain.

“I have trained as a distiller, I love blending, and I can't wait to get into experimenting in the distillery. Our ideal role, even for the next 20 years, is to play with the products. Everything else that you have to have around it, we get in good people in to do that. However, we are also product driven and market-led, and we have to pivot now to a marketing company too.”