The Advertising Standards Authority has ruled that Pickering's Gin's claim to be "Edinburgh's first gin distillery in over 150 years" is misleading.
The claim appeared on the brand's website, on its Twitter profile and local news media.
The Spencerfield Spirit Company complained to the ASA that the claim was misleading could not be substantiated.
Pickering's Gin was launched in 2013 in the Summerhall arts centre in central Edinburgh, which already contained a brewery.
In its submission the ASA, Pickering's contended that it had searched the council archives and commissioned an opinion from an independent expert on the history of Edinburgh gin.
Pickering's research identified wine merchants, whisky blenders and general distillers that had also distilled gin on their premises.
"There was no evidence of there being another sole purpose, bricks and mortar gin distillery having been built in Edinburgh in the last 150 years by anyone other than Pickering's and, subsequently, Spencerfield," its submission said.
Pickering's noted that while there were producers operating from Leith within the 150-year period, they were not relevant to the claim since they were founded before 1920 when Leith was formally subsumed within the city of Edinburgh.
As part of its complaint, Spencerfield provided a 1934 advert for gin distilled in Leith placed by a producer of both gin and whisky. Spencerfield also supplied a Royal Commission on the Ancient and Historical Monuments of Scotland listing, which stated that a warehouse and office complex in Leith, Edinburgh were used to distil gin in the 1930s.
The ASA acknowledged Pickering's argument that its claim related only to dedicated gin distilleries. However, it ruled that "the claim did not refer to the 'exclusive' nature of the distillery and we therefore considered that consumers would understand it to relate to all commercial gin distilleries, not just those operating in premises or by companies exclusively manufacturing gin".
The ASA ruled that because there had clearly been gin distilled in Edinburgh since 1863, and Pickering's was unable to prove that such operations were founded prior to 1863, it's claim was misleading.
Pickering's has now amended the wording on its website to include the word 'exclusive'. The copy describes Pickering's as "the first exclusive gin distillery to be established in Edinburgh for over 150 years".
Spencerfield is run by former Glenmorangie marketing director Alex Nicol. It produces three whisky brands - Pig Nose, Sheep Dip and The Feathery - as well its award-winning Edinburgh Gin.
Spencerfield opened its Edinburgh Gin Distillery in 2014.