The bay of Scapa Flow lies with the Orkney Mainland to the North and South Ronaldsay and Hoy to the East and West respectively. The bay is of considerable historic significance, having been a naval base for the British fleet during both World Wars. During the First World War, the Grand Fleet employed the bay as their Northern base and during the Second World War a German U-Boat entered the bay and subsequently sank the HMS Royal Oak.
The Scapa whisky distillery had been distilling since long before, having been founded by Macfarlane and Townsend in 1885. The little huddle of buildings lies just outside of Kirkwall at Scapa Bay, and the distillery draws its waters from the Lingro Burn. Scapa distillery is decidedly small with a total capacity of one million litres annually, though the distillery runs at roughly one third of this with a staff of just three, working three days weekly. Hiram Walker acquired the distillery in 1954 and installed a Lomond still a few years later to replace the wash still. The Lomond still is a comparatively recent innovation and produces a heavier, oilier spirit.
During the 1970s, Scapa was renovated and modernized. Malt whisky from Scapa has long since been used as a blending component and it is notably used in Ballantines blends. Despite this, single malt whisky from the distillery is highly prized and under its new owners, Chivas Brothers, Scapa is being marketed as a premium product. The distillery was mothballed in 1994 and did not reopen until a decade later, though during its closure staff from nearby Highland Park ran the distillery for a few months. Just before reopening in 2004 there were extensive renovations and as much as £2.1 million was spent. In 2005, production slowed whilst more refurbishments were carried out with Chivas Brothers at the helm.