A taste of the Highlands in Virginia’s hills

LOVINGSTON, Va. — The modest white structure nestled in the hills here off US 29, about 40 minutes southwest of Charlottesville, doesn’t look like an $8 million investment to the casual observer. But its owners are hoping that what’s inside the humble building will be an inroad to a billion-dollar industry.

“We’re making traditional single malt whiskey in the Scottish way,” said John McCray, president of Virginia Distillery Company, pointing to two giant copper stills. “Those over there were actually made in Elgin, Scotland.”

Although it’s inappropriate to call the whiskey a Scotch — it’s only Scotch if it’s made in Scotland — everything in this two-year-old startup is designed to make a product that will taste a heck of a lot like the real thing.

“We brought an engineer over from Scotland to design every aspect of the distillery,” McCray said. “The whole facility is set up the way Scotch has always been made. There’s not a computer in the place.”

The equipment in the 19,000-square-foot distillery is so big that the two-story building, located about two hours west of Richmond, was constructed around the stills and mash tuns. McCray said he hopes to have the stills fired up by next year, pending ABC clearance.

The idea for Virginia Distillery was born from an evening of good Scotch and good friends. McCray and his wife, Pat Jones-McCray, who are both veterans of the health-care industry, were sipping on a 16-year Lagavulin and, after doing some damage to the bottle, one of their future partners announced a plan.

“He looked at us and said, ‘I’m thinking about starting a single malt distillery, what do you think?’” McCray said. “We said, ‘Sure!'”

Two years ago, McCray and his wife bought into the business.

But starting a distillery presents some significant business issues, including the fact that you can’t sell your flagship product for years while it ages.

“By the Scottish standard, it can’t really be called a single malt until it has been aged for at least three years,” McCray said.

But that can be challenging when you have $5 million invested in a business and investors to keep happy. Jones-McCray, who is vice president of marketing for Virginia Distillery, said the company would be generating revenue while they wait for the single malt to age in the bourbon barrels.

Jones-McCray said the company would sell casks to customers who want to have their own private label single malt to give to clients and friends as somewhat extravagant gifts. The cost of reserving a tank will be between $2,000 and $3,000 up front, with a comparable payment on delivery, although the final costs have not been determined.

The company will also be selling some aged Scotch that it imported from Scotland and is finishing in Virginia wine casks. The product is aging in a warehouse in Kentucky while the company awaits its state distiller’s license.

“It’s been coming along beautifully,” Jones-McCray said. “We have a barrel, and we’ve been tasting it as it ages. It’s been great to taste the wood and see the color in it.”

The company will also be selling a clear barley spirit that Jones-McCray said would work well in cocktails and also be pleasant sipping liquor.

“We won’t be devoid of revenue for three years,” she said.

In the meantime, the company is raising money. McCray, who spent 30 years in the pharmaceutical industry, said the company is looking to raise between $2 million and $3 million. And although it might be hard to get investors to sit still for three years, the market for single malt whiskey is undeniable. Last year, the Americans consumed almost $1.1 billion worth of imported Scotch.

“We’re launching this into a rising tide of demand for this kind of product,” McCray said.