Meet The Whisky Startup Thriving While Industry Giants Retreat

Forbes

11-04-2025

The Dornoch Distillery team led by Phil and Simon Thompson continues expanding their Scottish whisky empire despite challenging market conditions affecting major industry players across the Highlands.
On paper, 2025 is a terrible time to start a distillery. With consumers already tightening their belts due to the rising cost of living and the knock-on effects of higher interest rates, the outlook for the whisky industry has been far from encouraging. Add to that the continued strain of global trade tensions, including US tariffs on Scotch whisky, and the picture looks even bleaker.
Even major players are feeling the pressure. Diageo recently shut down its Distill Ventures programme, leaving ripple effects in its wake, most notably at Denmark's largest whisky producer, Stauning, which has cut around 25% of its workforce following Diageo's departure.
So, is this the worst possible time to start a new whisky venture? Perhaps. And yet, two brothers from the Highlands are doing exactly that, and not only surviving, but thriving.
Ask anyone in Scotch whisky and they will likely know Phil and Simon Thompson, either personally or by reputation. They're easy to like, helped in no small part by their enthusiasm, humour, and the fact that they're rarely without a bottle of whisky in hand.
For years, their whisky bar at Dornoch Castle Hotel, set against the rugged backdrop of the Scottish Highlands, has been a pilgrimage site for whisky lovers. When lockdowns struck in 2020, they continued to serve their customers by posting drams, a simple gesture that kept their community of devoted whisky lovers connected. Scottish Licence Trade News also named it Whisky Bar of the Year in both 2014 and 2016, and Best Whisky Bar in Scotland by Scottish Field in 2019.
But that was only the beginning. In 2016, Phil and Simon launched the Dornoch Distillery Company with the aim of reviving the character of old-style Highland spirits. They raised their initial capital through a successful crowdfunding campaign, which hit its target within weeks thanks to global interest. The funds allowed them to convert a derelict late-19th-century fire station, tucked within the hotel grounds, into a fully operational distillery.
The Thompson brothers' original Dornoch Distillery operation, housed in a converted 19th century fire station (est. 1881) that sparked their whisky-making journey and award-winning spirits empire in the Scottish Highlands.
When production began in early 2017, Dornoch Castle became the first hotel in the UK, possibly even the world, with its own on-site whisky and gin distillery. Fast forward to 2025, and their spirits are now exported to 14 international markets. The only thing holding them back is the size of their current site.
Buoyed by their success, the duo have recently announced plans for a brand-new venture: a $2.4 million (£1.8 million) crowdfunding campaign to support the construction of the Struie Distillery, a state-of-the-art, sustainable distillery to be built in Dornoch, just 200 metres from their existing site at Dornoch Distillery.
Artist's impression of the planned Struie Distillery in Dornoch, Scotland, located just 200 metres from the brothers' original distillery site. The £1.8 million sustainable facility represents an ambitious expansion of the Thompson brothers' whisky operations in the Scottish Highlands.
In an email conversation about the new distillery, I asked Simon Thompson whether they had any concerns about the current market conditions. His response was characteristically stoic, stating:
"We like to joke that Struie is the best new distillery proposition of the past decade, launched at the worst possible time in the past decade."
His confidence is well founded too, having already raised $2.94 million (£2.26 million) on Crowdcube, a UK-based equity crowdfunding platform, representing 122% of the capital they sought to raise.
Despite this fundraising success, Thompson remains pragmatic about the challenges ahead, recognizing that the whisky industry has always been cyclical in nature. Indeed, veterans of the whisky world understand that turbulence and challenging periods are simply part of the whisky cycle, most notably seen during the whisky loch of the 1980s when distilleries were forced to close due to oversupply and falling demand.
Phil and Simon anticipated these market shifts long before they occurred, having planned their strategy with an awareness that the whisky boom, which reached fever pitch in 2022, would inevitably face correction.
As Phil explains, their long-term approach was never about reacting to the market, but preparing for its cycles: 'We planned for a down market. We've had a playbook since 2016, which we kept updating with strategies not just to survive, but to thrive in a down market. Whisky always overshoots on the upswing and undershoots on the downswing. It's just the nature of making a product today that you intend to sell in 6 to 60 years' time… and in an undershoot, there is opportunity. Our new 'Mystery Malt' is from the playbook, designed years ago to take advantage of a down market while being a win for everyone.'
It's this blend of meticulous long-term planning, a deep understanding of whisky's cyclical nature, and an infectious passion for their craft that allows the Thompson brothers to confidently forge ahead with Struie Distillery. While market forecasts might paint a bleak picture for 2025, their journey serves as a compelling reminder that for those prepared to play the long game, even the perceived 'worst of times' can hold the seeds of opportunity and success.