Family matters

Family matters

They say blood is thicker than water, but what about whisky? There may be a vital spark that makes family-owned distillers stand out from the crowd

Interview | 05 Feb 2021 | Issue 173 | By Mark Jennings

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I’ve been thinking a lot about family recently. It’s probably the distance from them (I recently emigrated from the UK to Sweden), the difficulty seeing them (thanks, Covid) and the passing festive period spent apart. This turned my thinking to family business and, specifically, what makes a family-owned whisky business different from any other kind.

When you think of family businesses there are certain tropes of fealty, scrimping and perhaps striving and strife that come to mind. There are also more romantic connotations of legacy, duty and upholding a family name to consider. However, for every good tradition there is perhaps a figurehead who is ‘stuck in their ways’ and, for every family bond, the danger of valuing loyalty over skill.

Of course, the term ‘family business’ is far too broad; many are ‘mom and pop’ type operations, and others are vast, international businesses – some of the biggest names in spirits are family controlled. That said, I was sure there was something about family businesses – big, small, established or nascent – that united them. I spoke to five people who have started, inherited, or work in them to try to uncover the secret sauce that binds them together.

Patrick van Zuidam

Master Distiller & Managing Director, Zuidam Distillers – Second generation

Known for its Millstone single malt and rye whiskies, this Dutch distillery was founded by Fred van Zuidam in 1975. Originally occupying no more than 300 square metres, with only one small copper still, it is now world renowned with a range of products under the Zuidam name, including genevers, rums, gins and liqueurs.

Today, Fred’s two sons run a state-of-the-art business with four brand new copper stills and more than 1,000 barrels maturing on site. Patrick van Zuidam has worked for the business for 26 years, man and boy. I asked him what it was like to grow up in the family business. He is quick to joke and exhibited a wry wit, “My father had been the master distiller for one of the big distillers here in Holland and then very stubbornly thought that he could do it better himself. In the early days, my parents were poor and had to work seven days a week. So, obviously, I had a very poor childhood but I had the benefit of growing up with a distillery for a nursery.”

I wondered what Patrick felt marked family businesses out from other types and he soon explained, “There are some exceptions, but typically they are focused on short-term profits. But I grew up in a company where my father always had a long-term vision. Of course, you needed to pay all the bills but short term was not important whatsoever. My father drilled it into me that, in a company like this, you need to look at where you want to bring the company and make decisions and stick to the decisions.

“My shareholders are my parents and I never told these shareholders that other companies pay dividends,” he joked, “because we don’t pay dividends – all the cash stays in the company and gets reinvested. That is, I think, the biggest difference.”

Patrick also spoke about the speed of decisions, especially regarding a recent large capital investment, “We have a meeting, if you can call it that, basically a cup of coffee and together you say, ‘I want more capacity to put down more stock.’ You look at the sales and you say, ‘What do you think, can you sell more?’ So, you look at the parents, ‘What do you think?’ They say, ‘If you can sell more then buy the stills’, and we put down more, It’s a 10-minute decision.”

It’s easy to only ask about the successes, but I wanted to delve into how a family business handles failure. Patrick explained, “I think you cannot do everything right. So, you make decisions. Some turn out great and some are not so successful. I think that, within a family business, the balance is that you do the decision-making together... It’s something you do as a family. That means that if something goes wrong we all share the blame. I think you have to have joint responsibility for successes and for the things that are not so successful.”

Daniel Szor

Founder & CEO, Cotswolds Distillery – First generation

In combining a deep love of the Cotswolds with a passion for whisky, New Yorker Daniel Szor swapped the world of finance for distillation in 2014 and has never been happier. With his wife and growing team, this first-generation family business produces some truly lovely young whiskies – as one should expect from a distillery that had the former Bowmore man Harry Coburn and the legendary Dr Jim Swan (God rest his soul) as early advisors. I started by asking, as someone who had come from the corporate world, how Daniel feels a family business does things differently.

“I was ready to get on my bandwagon and go on about how we are more flexible, how bigger companies can’t be creative – all these kinds of things,” he began. “But then I realised that one of the things that’s interesting about whisky is that there are a lot of family-owned businesses out there and some of them are bloody enormous. You’ve got Brown-Forman, William Grant & Sons, obviously; you’ve got Pernod Ricard, and you’ve got Bacardi… I guess my answer is that, certainly, corporate-owned distilleries are going to be at the far end of the spectrum in terms of maximising shareholder return and perhaps there is the potential in a family-owned distillery for the family to really focus on creating a certain kind of quality. I’m trying to follow that model.”

I wondered if working with other family businesses was important to him, even if there were cost implications. “It’s very important to us,” he said. “Our maltsters are family owned. Our barley farm is owned by a family. Just yesterday I was looking back at five years’ worth of invoices that almost made me cry at how much we have spent buying fresh hedgerow fruit from a family-owned business. That’s painful but, on the other hand, I do have a certain appreciation for knowing that there’s not a lot of overhead.”

Given the failure rate of newer businesses I had to ask for his view on how they would handle failure. “We haven’t been there yet and I am knocking on my desk really hard. I can’t imagine that it’s anything but more painful than it would be felt at the corporate level. Let’s face it, people read about me and they hear 30 years as a finance hedge fund… yada yada… and they just have this image of somebody who made a killing and now it’s about a hobby. Nothing could be further from the truth,” Daniel explained. “I literally bet the farm on this business, I had to take a mortgage out on our farmhouse and to know I not only bet my money, but I bet my wife’s money too, and even my mother came in and helped… So, I guess in terms of handling failure, we kind of don’t really have that option. This isn’t something you can walk away from unharmed and just chalk it off to a venture. This is literally my kids’ inheritance – it’s really done with a view of providing for them.”

Jean-David Costerg

Managing Director, Lambay Irish Whiskey Company

Lambay Irish Whiskey is the result of two families coming together. Firstly, the Camus family, producers of Camus Cognac. Founded in 1863, it is the largest, independent family-owned maison, now led by fifth generation Cyril Camus. Famous for their extensive Borderies estates and trademarked intensity distillation process, they have recently made headlines by launching products which exhibit the impact of specific maturation environments.

Camus have married this deep distillation knowledge with the unique setting of Lambay Island, off the Irish coast, which is maintained by Alexander Baring of the famous former banking dynasty. Lambay’s whiskeys are blended from sourced liquid before being finished in French oak, ex-Cognac casks sourced from Camus’ warehouses. As managing director, Jean-David Costerg runs this venture and is attempting to pair Irish spirit with French maturation skills, all in a family way.

I started by asking Jean-David, who has worked for various large family-owned companies through his career, to highlight the key differences to other companies, “It’s the long-term vision in terms of everything we do, we don’t worry if shares are up or down. It is more crucial for each family to proceed on to the next generation. There’s a famous quote we say, to be the Cognac owner is relatively easy, because you just save the good eau-de-vie that your grandfather produced. It’s important to make sure that you put the foundations in for the next generation. The family are much less impatient, less ready to sacrifice long term versus short term.”

With a firm as old as Camus I wondered how failure was handled – was it as visceral and final as Daniel at Cotswolds described it, or different? Jean-David explained, “Failure can be accepted. Much more so than in a bigger organisation or much more research-driven companies where if you fail, you’re out. We seek to understand ‘why did it fail’ rather than blaming. We learn from failure and we are very driven by innovation. We try to do things differently, to challenge ourselves.”

“This is especially so in Irish whiskey, and of course when you start to innovate, you may potentially fail, but we have a learning culture. After five generations we have shown we can learn from failure.”

Brian Kinsman

Master Blender, William Grant & Sons Distillers

Probably the most famous family-owned business in Scotch whisky, William Grant & Sons produces Glenfiddich, The Balvenie, Grant’s and countless other famous spirits. The company and, by volition, this family’s vision, has shaped the very nature of Scotch. As I write, news reached me that family patriarch Sandy Grant Gordon had passed away. He essentially established the modern single malt whisky category, which just shows how critical a family business can be. They are now into their sixth generation.

Master blender Brian Kinsman has worked for them for 24 years and is perhaps uniquely able to identify what makes a family business thrive. I started with what they, as a family business, could do that large businesses couldn’t.

“I think what we can do is add pace, we can bring quick decision making,” began Brian. “For example, our new distillery. Sure, the building existed but we basically developed a pretty big new distillery in less than a year. That was all the way from ‘we think we need to do this’ to ‘we’re going to do it’ to ‘we’ve done it’. It was incredibly quick because the engagement was there.

“I think looking at the more corporate businesses, there’s a lot more decision making, there’s a lot more going out and consulting with shareholders to get their buy-in for the level of investment.”

While small family businesses may be more prepared to take risks, I wondered what the appetite was for a company of William Grant’s scale – was the entrepreneurial approach still there?

“Risk on the core brand, I would say that possibly they are more risk averse, where the engagement of protecting what we’ve got is enormous because it’s very personal,” explained Brian. “For example, we’ve been through an expansion at Glenfiddich and the level of scrutiny from the family members was huge. All the way from the process to the aesthetics – they make sure that it’s genuinely happening with respect, I mean all the way down to, ‘How are you going to landscape it?’ and ‘Where are the paths going to go?’. They want to look back at it and be proud of what was done during their tenure as leaders of the family.”

I wondered if that much scrutiny was stifling when it came to creating new products. Apparently not, according to Brian, “I don’t recall ever asking permission to do an experiment and being told no. Take the example of Balvenie Peat Week, started back in 2001.There was no marketing brief, there was no desire for us to produce peated malt, but the operations team wanted to – ‘We don’t know what it’s for, we don’t know what we’ll do with it’. It was a really easy thing to get approval for, in fact I’m not sure it was ever formally approved, more of a, ‘Yeah, that’s absolutely fine’.”

Brian went on to powerfully describe how much legacy mattered to the family, and I pressed him further in his own endeavours, “I know for a fact they feel it, they feel the weight of responsibility for everything, including the number of people they employ. When you speak to family members, there’s definitely a feeling of the desire for them to hand [the business] on to the next generation in a better state than they got it – bigger, better, more distributed, whatever it might be.

“For us as employees, it is more about… pride. The thing I notice, and certainly when people join us from other companies, is that the level of pride in our brands is enormous. I think that partly comes from this kind of family ethos and family feeling.”

Leonard Russell

Managing Director, Ian Macleod Distillers – Third generation

Owners of Glengoyne, Tamdhu, Smokehead and many more, this independent, family-owned firm was started by Leonard’s grandfather, who bought Ian Macleod & Co. and many other brands along the way. Leonard took up his first role in 1989, joining his father, Peter, who had started working in the business back in 1956. More recently, Leonard’s eldest son, Tom, has joined the business and thus helped Ian Macleod Distillers take the step to becoming a fourth-generation whisky company. Alongside various developments at their Glengoyne and Tamdhu distilleries, they are currently rebuilding the historic Rosebank Distillery in Falkirk.

I started by asking Leonard, as I had to others, if there is something unique in the way family businesses, and people who want to work in family businesses, can operate. “We’re a family business foremost, and what you get from that is that we’re not quoted on the stock market. We don’t chase short-term performance. We think medium to long term, and you’d have to. To rebuild Rosebank is going to cost us more than £20 million and we won’t get a return from that spirit until it’s mature,” explained Leonard.
“Being a family company, I don’t feel any pressure to launch Rosebank when it’s three years old, I think that we would wait until it was mature and something that we could be really proud of.”

We’ve seen that while family businesses can move quickly, many are aware of their legacy, both that which is handed to them and what they hand on. Does this stifle entrepreneurialism?

“No, keep going forward. Always keep going forward,” advised Leonard. “We’ve been fairly opportunistic in our growth over the years, and now I think it would be decidedly dull to sit still.”

So, what have we learned? Some of the tropes bear out and so too the perception of risk, long-term thinking and agility, but what I learned from speaking to these people is deeper. It’s hard to sum up in words but they were just different, united in something intangible. Perhaps the way they spoke about their work, or the choice of words when describing the company or its place in the world – it was just more human. Maybe that’s the unifying characteristic: you need to be cut from a certain cloth to be able to work in a family business. Even sons and daughters often don’t choose to follow in their parents’ footsteps; those who do have self-selected.
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