Scottish Spirits – Scotch Or No Scotch?

by Oliver Klimek on January 18, 2011

The whisky community was taken by surprise yesterday by the announcment of Scottish Spirits Ltd. to offer whisky in cans in some markets in Central and South America. The company was in the news last year because their advertising was ruled by the Advertising Standards Authority to be misleading. I vaguely remember having read the news last autumn and also had a quick glance at their website. But I think it’s time to look a little closer.

Scottish Spirits Ltd. is a Panama based company that offers various types of whisky and other spirits. It seems to be a bit of a family enterprise. The President is Reynald Henry Katz, press releases are published by a Kevin Grattagliano Katz, and the CEO of Scottish Spirits LLC, the US importer based in Tallahassee, FL, is called Donna Katz. Scottish Sprits claims to also have a dependency in Glasgow.

The website is not very useful for finding out how to buy their products. But they advertise for their plan to manufacture them under licence. The company will sell you the equipment (“Filling machine, crimping machine, labeling machine, tanks, filter press and air pumps”) as well as raw materials and demands a 5% royalty on sales. And yes, that’s all what’s needed to make their “whisky” which they claim “is produced with real malt” right in the first sencence when you hit their homepapage.

And they are absolutely right: The material needed are “Glass bottles – 30 ml, 200 ml, 350 ml, 500 ml, 700 ml, 750 ml and 1,000 ml – caps, overcaps, labels, 12-pack cases, malt and alcohol”

Now it’s obvious what they make. Industry ethanol is mixed with malt extract and sold as whisky in countries with sloppy labelling requirements. The 14 whisky brands prominently featured on the website may differ by varying malt specifications and/or concentrations when mixing up the concoction.

But They Also Sell Scotch, Don’t They?

In December 2010 Scottish Spirits pulished a press release about their expansion to India:

“Scottish Spirits Ltd extended its operation in India in the name of Scottish Spirits PVT. Scottish Spirits PVT is the sole INDIAN importer for Scottish Spirits LTD, which specializes in manufacturing and distributing Scotch whisky worldwide.

The full Scotch whisky product line consists of 18 Scotch whisky brands bottled in 180 ml, 750 ml and litre at 43% volumes. Scotch whisky is suitable for drinking straight up or with soda, tea or other mixers.”

So they talk about 18 Scotch whisky brands and their plans to import them to India. And they claim to actually be manufacturing Scotch Whisky.

The company website shows a warehouse with a lot of bourbon barrels. And it is also stated that the company offers Scotch Whisky in bulk. So maybe they even store some proper Scotch whisky on their Glasow premises. But will they actually export this to India? Even though India has recently lowered its horrendous import duty on alcohol, it is still at a whopping 150 percent. This will be a pretty expensive budget Scotch. A more likely option would be to sell it to producers of bottom shelf supermarket whisky somewhere in Europe.

I am no law expert, so I can’t comment on the legal consequences of lying in a press release. But I seriously doubt the truthfulness of this announcement, especially regarding the optimistic goal of selling one million cases a year by 2014 in India alone. That’s a lot of Scotch, about 15% of the total global sales of Ballantine’s.

What To Make of All This?

A bit of googling around shows us that Reynald Katz is also the owner of Panama International Merchandising Mart (PIMM) offering commercial real estate in the Colon Free Zone in Panama. Looks like this project was never carried out, though. Also he is owner and CEO of Serlogin S.A. claiming to produce spirits under licence of European manufacturers. And quite a bit more can be found on what seems to be a pretty flamboyant offshore tycoon.

There have been anonymous comments relating Mr. Katz to fraudulent actitivites, but these allegations have to be taken with caution because they can’t be verified by a simple internet search.

To draw a careful conclusion, Scottish Spirits have clearly branded themselves at the rock bottom of the spirits industry. The labels of their “whisky” are designed to be similar to that of major brands, so an attempt to fool custumers into thinking that thy buy a high qualitiy product is pretty obvious. Legal or not? I honestly couldn’t say. But I guess Mr. Katz is clever enough to check for loopholes in legislation before starting big ventures like that.

Kevin Grattagliano Katz

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