Profiling UK Public Leaders: Interview with Andrew Dane (LSE: ART)

Profiling UK Public Leaders, Episode 3

When Andrew Dane stepped up from CFO to chief executive of The Artisanal Spirits Company, his chair gave him a benchmark: your job is to make decisions, and if you are getting seven out of ten right, you are doing a good job.

He calls it the most useful advice he has received. Everyone reaches decisions differently, he says, but ambiguity and indecision can paralyse a business. Make the call, adapt if it turns out to be wrong, and do not expect perfection.

Artisanal Spirits, which owns the Scotch Malt Whisky Society, listed on AIM in the summer of 2021, at a point when growth stories were still readily funded. Dane notes the questions from the market have since shifted to profit and cash.

Two camps in one share register

Dane describes a company whose value sits largely in maturing whisky stock, which produces two very different readings of the same balance sheet depending on whether you look at profitability or at assets.

Both readings exist in his share register. Legacy pre-IPO investors are comfortable with the company carrying debt and would happily see it rise. Investors who came in at or after IPO tend to view debt through the lens of current profitability, and some would prefer to see it paid down.

He says he does not think either extreme is right, and that a large part of the job is holding his own view of the balance while explaining to both ends of the spectrum why neither position works in isolation. In a private company with a single aligned shareholder, he says, he is fairly certain the decision would have gone the other way.

Starting the flywheel where the liquidity already is

Dane says the thing that surprised him most after listing was how illiquid the stock could be, and how much that drove volatility in the share price.

His view is that new institutional investors are central to the long-term plan, but that the gap between where Artisanal Spirits’s liquidity was and the level institutions need before they will commit was too wide to close directly. So the strategy started where there was already enough liquidity to build on, which meant retail.

In practice that has meant more retail communications, more video and interview content, investor events including some hosted in the company's own offices, and applying the same funnel thinking the business already uses as a direct-to-consumer brand.

Designing a shareholder benefits programme

The Society is a membership business, and Dane points out that members already feel a degree of ownership, some after decades of membership. Giving them real ownership was a natural extension, and member participation at IPO was strong enough to be oversubscribed.

His design principles for anyone considering something similar:

• Make it easy to operate. Nobody wants more cost or complexity in the business
• Make it affordable so it is sustainable. He says there is nothing worse than promising benefits and later withdrawing them
• Target it at the behaviours you actually want, rather than being generous across the board

That last point matters most, in his account. The deepest discount goes on membership renewal, which costs the business little and has improved retention and loyalty. Product discounts are shallower and applied to selected ranges rather than the whole portfolio, partly to introduce shareholders to brands they did not know the company owned. Time-limited exclusive bottlings for investors who commit by a set date have run twice, both times with strong feedback.

He also notes a group he did not expect: several hundred shareholders who are not yet members. The programme, he says, works in both directions.