Danish whisky maker Stauning is facing the triple challenge of Diageo pulling out of Distill Ventures, a tariff war and European whisky producers being prohibited from using the term ‘rye whisky’.
Stauning has announced it is cutting approximately 25% of its workforce, making 13 of its workers redundant, predominantly in the United States and on the marketing side of the business.
Stauning co-founder Alex Munch told The Spirits Business the decision was due to “investing so heavily in scaling up the business in a lot of different markets, and especially in the US, which is very expensive, and where we see a lot of uncertainty in the market right now with tariffs coming on”.
The company will focus more on its home market of Denmark and EU countries.
Diageo announced last month it was pulling out of Distill Ventures, which has provided more than £245 million in financial support to over 35 businesses since its launch in 2013, including Stauning, Australian coffee liqueur maker Mr Black, UK-based alcohol free spirits brand Seedlip, Starward Distillery in Melbourne and Westward Whiskey in Oregon.
Diageo was the sole investor in Distill Ventures, which was established to back early-stage spirits companies.
In a statement, the drinks giant said: “Following more than 10 successful years partnering with Distill Ventures to nurture and scale emerging spirits brands, we have undertaken a strategic review of our approach to early-stage, venture investments.
“Moving forward, Diageo will not be bringing in any new brands into the Distill Ventures programme, whilst a smaller Distill Ventures team will remain in place to manage a reduced number of existing investments.”
Furor over rye whisky ban
It has also recently been discovered that the EU signed an agreement with Canada in 2003 that prohibited European whisky producers from labelling their rye whiskies ‘rye whisky’.
At the time the production of rye whisky in EU countries was close to non-existent, however European distilleries have embraced making whisky from rye in recent years, including Stauning and Thy in Denmark, Kyrö in Finland, Storck in Germany and Ruotker’s in Austria. Stauning recently won Best Single Cask Rye Whisky at the World Whiskies Awards.
“Nobody was aware of [the ruling] – and it hasn’t been enforced for the last 20 years,” Munch said.
“We went through a long approval process to get into Canada and our rye whisky was approved without any problems. In the US market, it is a requirement that we label it as rye whisky. This clearly shows that it is a strange situation.
“It’s perfectly fine to protect ‘Canadian Rye’ – that makes sense. We also dream of protecting ‘Danish Whisky’ in the future. Typically, you protect a specific production method or the region where it’s produced. But the agreement in its current form doesn’t make any sense.
“We are recognized for our rye whisky all over the world, and we will continue to make Danish rye whisky exactly as we always have. Even if we eventually have to change the wording on the label, we will never compromise on our way to make whisky or on the quality of the spirit that we deliver to the world.”
Although Stauning is prepared to adapt to the naming restrictions, the distillery is working with the EU to change the agreement when it comes up for renegotiation next year.
In the meantime, Stauning has created a whisky bottle with the words ‘rye whisky’ replaced with the word ‘Censored’.
“We have simply chosen to censor the name of the whisky because it is a rye whisky that bears the name ‘Rye’ – which, under this trade agreement, we are not allowed to call it,” said Munch.
Stauning is distributed in Australia by The Whisky List