This paper reports the performance of a granular-bed anaerobic baffled reactor (GRABBR) used in the treatment of a whisky distillery wastewater. The results reveal that the system was very effective in the treatment of the high-strength wastewater. Its effectiveness stemmed from process stability created by phase separation promoted by the reactor configuration. It combined the advantages of baffled reactor systems and upflow anaerobic sludge blanket (UASB) systems. Up to 80% COD (or 90% BOD) removal was observed for an organic loading of 4.75 kg COD/m3 day. It was also found that acidogens were mostly non-granular while methanogens were granular. The GRABBR encouraged phase separation, and consequently the establishment of separate zones for granular and non-granular sludge. The system also showed very high solids retention with effluent suspended solids concentration of about 80 mg/l for all organic and hydraulic conditions studied. This was attributed to the occurrence of granular methanogens in zones (or compartments) downstream of zones occupied by non-granular acidogens.