Shetland's water of life

What do you do for cash while you wait for your new whisky distillery to mature? Make vodka and gin, says Nicholas Faith

Caroline Whitfield has come up with a novel way of funding a whisky distillery, the first in the Shetland Isles. She is selling gin and vodka.

The idea to sell two spirits hardly associated with Scotland is helping Ms Whitfield get some revenue for her Blackwood distillery business while the whisky matures.

For the half-Norwegian, half-Scottish MBA, setting up a whisky distillery in the Shetlands was the most natural thing in the world. They were the only islands around the Scottish coast which didn't have a distillery of their own. Yet they had the same combination of pure water and salty, peaty air which has brought fame and fortune to Islay and Skye.

Blackwood's board of directors includes James Espey, formerly a key player with Guinness and Seagram; David Jarvis, former chief executive of Hilton International; and Arthur Davies, who set up the first whisky distillery in Wales. Of the original budget of £3.65m needed to launch the distillers, the largest amount, £1.53m, came from the Shetland local authoritties, using European Comm-ission money. Bank of Scotland lent £800,000 and the rest is being raised from individuals, investing from £1,500 to £50,000 each. They are entitled not just to ordinary dividends but a "whisky dividend" of one bottle per 500 shares.

Notably they've cut the cost of the distillery, even though in the Shetlands you need especially strong buildings to cope with the wind - which reached 192mph in 1992 before the measuring device was blown away. "It's like building ships on land," says Ms Whitfield.

This left the problem as to what she was going to use for money while waiting the five or so years before she could actually sell the whisky. Blackwood - named after Ms Whitfield's husband - realised it could exploit the Shetland brand name.

The gin uses local botanicals, including such romantic-sounding ingredients as "Wild Water Mint growing near the lochs, Sea Pinks picked during its short summer flowering and Angelica Root from the strain first introduced by the Vikings 800 years ago". Even the vodka is special: "triple distilled over Nordic Birch Charcoal" and "ice filtered".

The drinks' first outing was at the Royal Highland Show in May, where the stand was mobbed. At that point the team realised that "we were filling a gap, the idea was taking on a life of its own". The Scots loved the idea of their own brand and the whole company decamped to Bordeaux to sell the idea at Vinexpo, the drinks world's biennial trade fair.

A new, un-Scottish dimension emerged after the arrival of Tom Jago, one of the trio who invented Bailey's Irish Cream. He came up with the idea of a new vodka cream liqueur. It was based on vanilla - "the most popular flavour in the world," according to Ms Whitfield. She and her colleagues promptly christened it "Jago's" and set about selling the idea. They have already convinced Star Importers in the US.

All three products have been so successful in Britain that they're having to restrict shipments. As a result the cash flow from white spirits is comfortably covering the working capital required in the early years while the distillery is being built.