Blackwood Distillers has said its planned distillery on Shetland "would be built by now" if it had stuck with its original site at Catfirth near Lerwick, a plan to which it is returning to following an aborted attempt to build on the island of Unst.
Blackwood was forced earlier this month to abandon plans, announced last May, to redevelop an RAF site on Unst, though founder Caroline Whitfield said yesterday that the plan had been "the right thing" to try, given island economics.
The original site had been due to start construction two years ago.
She said: "It is frustrating not getting a distillery built but we are now back at Catfirth. The regulatory environment in which we work is one of the toughest, not only (HM) Customs but environmental practice ... (where) there has never been a distillery before."
She added: "We have got to go to our contracting suppliers and get everything recosted ... 10% either way on £2.5m would be a lot of money for us."
The company has published results for 2006 which show a loss widening from £2.16m to £2.44m, though turnover rose 11% to £1.28m and gross profits were up 35% to £319,000.
Blackwood has been developing white spirit brands to bridge the gap to whisky production, originally due to start next year.
Joanna Dennis, finance director, said: "We have been focusing this year on building long-term profitable business and have stopped activities such as consumer shows, which brought in revenue but on which we were making a loss.
"Our growth in underlying sales of key customers has been improving and these provide better margin sales."
Whitfield added: "People think nothing is happening but getting planning permission and full consent to operate on Catfirth has, in total, cost us over £400,000 hard cash.
"We have received no public money, no loans, no grants - this has been entirely financed by private shareholders."
Blackwood also launched its Diva vodka in test markets in Edinburgh and Singapore with an investment of £90,000, and continued to invest in Blackwood's Gin, which has added Majestic Wine Warehouse and Oddbins to its UK-wide listings, which also include J Sainsbury.
"This has been funded by ongoing private investment in the business including an additional £750,000 of further investment since the accounts were approved," Whitfield said.
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