To meet the demand from the Spanish market, L.O. Smith decided to open a new factory in his hometown of Karlshamn. Situated on the southeast coast of Sweden, the geographical location was perfect. He named the company Carlshamns Spritförädlings AB.
Swedish politicians were keen to help the local factory owner. Ernst Meyer, who later became Sweden’s finance minister, presented a bill on the matter. On May 4, 1883, the company was offered a piece of land at the harbor, and the municipality dredged the area around it. As the icing on the cake, Carlshamns Spritförädlings AB was exempt from harbor fees.
The architect Professor Magnus Isaeus was hired to draw the factory buildings. On November 17, 1884, the majestic and abundantly decorated factory by the harbor was inaugurated. The 75 meter long building had a 39 meter high tower and room for almost 600 workers. The locals were so enthusiastic about the new factory that it was reported in the local newspapers.
The following years, the factory in Karlshamn was used at full capacity and constantly increased its production. To handle the demand for oak barrels, another factory that could produce 30,000 barrels per year was set up in Stilleryd. The same year, Smith decided to expand the facility in Karlshamn. The two new factories were up and running by the end of 1886. Business was thriving, in other words. At its peak, as many as 900 people worked in the Karlshamn factories.
The good times would not last, however. In 1888, the Spanish state introduced a consumption tax on alcohol, which led to a sharp drop in sales. What was worse, all spirits already stored in Spain would also be subject to the new tax. Unfortunately, Smith’s company had just shipped over a large cargo of purified liquor and was now required to pay the new fee. Negotiations with the Spanish state broke down and Smith’s company was forced to pay large sums in arrears.
Due to the situation in Spain, the factories in Karlshamn had to close for six weeks in the autumn of 1888. In November, all staff were made redundant. There was a farewell party on November 20 and by New Year’s Eve, all operations had stopped completely.
It was not, however, the end of the liquor factory in Karlshamn. In the spring of 1889, the operation was taken over by The Carlshamn Spirit Company Ltd. Based in London, this company was L.O. Smith’s attempt to overcome the trade barriers that ruined his previous company.
In 1892, the factory was rebuilt as a sugar mill. The board believed that it was no longer possible to make a profit from alcohol production and in 1898, the last parts of the factory were sold to the sugar company. The production of sugar continued until 1954, when all operations in the factory closed.
The liquor factory in Karlshamn:
75 meters long
23 meters wide
A 39-meter-high tower
14 storage cisterns
80 carbon filters to purify the alcohol