Whisky’s first community benefit fund at ili

The proposed ili Distillery will benefit from the natural capital and international reputation of Islay. To honour that contribution, the ili Distillery will be the first in Scotland to offer a community benefit fund.

ili Distillery

The ili Distillery is a proposed whisky distillery on Islay with a strong focus on environmental and social sustainability. It will support 23 jobs across Islay when it is fully operational. The developers, Gearach Ltd, also wanted to consider different ways in which the community of Islay could benefit from the development of the new distillery. We worked with them to consider their options, based on the same principles for community ownership used by the onshore wind sector in Scotland. We considered the risk and reward each option would have for both the community and for the distillery. We also considered the practical lessons from the experience of the onshore wind sector, including the capacity of communities to raise the funds needed to invest in such a project. The best option identified was a community benefit fund linked to the bottled output of the distillery.

The proposals being brought forward are for a community benefit fund to be paid worth 50p for every Litre of Pure Alcohol (LPA) bottled. This would be equivalent to under £10,000 in Year 4 but would increase to over £50,000 per year by Year 10. As the distillery bottles and sells more, whisky, there is a direct benefit to the local community.

The fund will be worth £210,000 to the community on Islay over the first ten years.

We have recommended that the ili Distillery and the community engage with community foundation managers, who have significant experience in supporting rural communities to make the most of funding available.

Natural Capital and Community Wealth Building

The ili Distillery explored the approach to community benefit funding that had previously been developed by the onshore wind sector in Scotland. The wind and whisky industries are similar because both benefit from the natural capital of an area and are typically front-loaded capital investments. Both industries are assets to Scotland and are often based in rural communities.

Other sectors benefit greatly from the Natural Capital of Scotland. These include land management organisations, forestry, tourism and oil and gas extraction companies. Many of these industries also include significant up-front capital costs, low operational costs and the financial benefits, if any, are retained by those who were able to provide the initial capital investment. These organisations can struggle to maximise the community wealth building possibilities of this natural capital.

The Scottish Government is increasingly interested in the community wealth building approach to economic development. The principles of community wealth building are particularly relevant for those sectors that benefit from Scotland's natural capital. These principles include:

shared ownership of the local economy – supporting and growing business models that are more financially generative for the local economy
making financial power work for local places – increase flows of investment within local economies by harnessing and recirculating the wealth that exists

Organisations that benefit from the natural capital of an area should consider how their projects can be used to build community wealth. They could follow the example of the ili distillery and contribute to community wealth building by establishing an output linked community benefit fund. This would give local communities a stake in the success of these organisations, support community resilience and encourage these assets to be used to their full economic potential.

Considering community wealth building would have implications for these sectors and sharing the benefits of natural capital with the communities they operate in will have benefits for all.

Whisky’s first community benefit fund at ili

ili Distillery

Natural Capital and Community Wealth Building

Further Reading