New distillery revives the spirits of an island

Whisky distilling will return to the Isle of Arran this week for the first time in two centuries, following the sale of 2,000 "malt bonds".

Islanders, whisky specialists and investors have each paid pounds 450 for 120 bottles of Arran malt to be delivered by the turn of the century. The money raised has helped to fund a new pounds 2.5m distillery at Lochranza Bay, on the northern shores of the island.

On Thursday, the distillery will open and the first clear spirit - the uisge-beatha, or the water of life - will trickle off the copper stills and into oak casks where it will mature for three to eight years. By 1998, Scotland will have a new island malt to rival well-known drams from Islay, Jura, Skye and Orkney.

After planning wrangles and a two-month construction delay to allow a pair of golden eagles to nest, Thursday's ceremony will fulfill a decade- long dream of creating an Arran spirit. Whisky has been produced on the island since the seventeenth century, but the last legal distillery closed in 1835, following the imposition of swingeing excise duties.

In recent years distillers discovered that Lochranza Bay offered some of the finest water and peat for malt production. So, when Harold Currie stood down as managing director of House of Campbell distillers 10 years ago, he decided to mark his retirement by reintroducing whisky to the island. Through contacts built up during 40 years in the trade, his company, Arran Distillers, soon raised pounds 1.2m for the new distillery. But he needed more money to fund the development and hit upon the idea of selling whisky "futures".

He asked investors to spend pounds 450 on 60 bottles of blended whisky and a further 60 of single malt. The response was immediate. "We sold hundreds in the first few months. People realised that they would save around pounds 600 by buying ahead and soon we hit the 1,000 mark," Mr Currie said.

The success of the initial bond has prompted Arran Distillers to introduce Founders' Reserve - a second pounds 75 bond, offering 12 bottles of special eight-year-old single malt. It goes on sale next month.

With the Scotch whisky industry in the doldrums - United Kingdom sales have fallen by almost 20 per cent in the past five years and three distilleries have closed already this year - the venture is a gamble. But Mr Currie, 70, who was a football referee before he turned his attentions to whisky, is optimistic. He points out that although sales of blended whisky are down, the single malt market is expanding rapidly.

"I believe the future of the whisky industry lies in single malts. We must go up-market because people want high-quality malts. There is a gap in the premium market for a new niche single malt and Arran - with the cachet of being a new island label - will provide that."

Despite the optimism, one doubt remains. Until 1998, no one will know what Arran malt tastes like. Test batches of the new whisky, however, reveal that it has a sweet nose, and after three years in casks, some of which have been imported from American bourbon manufacturers, is likely to have a peat-induced peppery taste.

However, Mr Currie predicts that "Arran will be a refined malt. All the ingredients are right. Now it is just a matter of time."

For those who have not bought a bond, Arran malt will be in the shops in 2002, selling for about pounds 23 a bottle.