Asian boom fuels distiller’s earnings

Group Business Editor

Friday 25 November 2011

BOOMING demand for Scotch whisky in Asia has helped Glasgow-based distiller Edrington, which produces The Macallan and Famous Grouse, shrug off grim market conditions in Greece, Spain and Portugal to achieve a 6% jump in underlying interim pre-tax profits to £69.9m.

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Ian McConnell Business Editor

The strong performance of Edrington during the six months to September 30 signals that the wider Scotch whisky industry is continuing to perform well, in spite of the recent escalation of the eurozone debt crisis. The industry’s strong performance, against a tough domestic and global economic backdrop, is in stark contrast to the struggles of other sectors of the Scottish economy.

Edrington’s first-half turnover increased from £273.5m to £278.7m, a rise of 2%. The pre-tax profit of £69.9m, up from £66.1m in the first six months of the prior financial year, excludes exceptional items.Case sales of The Macallan single malt in the six months to September were up 5% on the first half of the prior financial year. Elsewhere in Edrington’s stable of single malts, Highland Park enjoyed volume growth of 4%. Sales of The Famous Grouse blended whisky were up 7% by volume. Edrington, which is owned by a charitable trust, highlighted this brand’s progress in emerging markets, including Russia.Ian Curle, chief executive of Edrington, appeared relatively untroubled by the deteriorating economic situation in the UK and overseas, as the eurozone debt crisis rages.And he highlighted Edrington’s continuing heavy investment in its brands.Mr Curle said: “I am pleased to report continued growth for the group in the first six months of this financial year.”He added: “Although we will encounter some challenging economies and markets, we’re looking forward to the second six months of the year and continuing to invest behind Edrington’s premium brands.”Edrington highlighted strong sales growth in Asia, describing this as “exciting”.Sales of The Macallan in Taiwan in the six months to September were up 10% on the first half of the prior financial year by volume. In South Korea, first-half sales volumes of The Macallan were up 13%.An Edrington spokesman highlighted the sales growth achieved by The Macallan in China.He said: “China is incredibly strong, right across the board. Macallan is on a similar strategy to [the] opening up of the market-places in Taiwan and South Korea, operating at the top end of the market, [with] aspiring middle-class consumers, and growing from there.” Edrington’s sales of The Famous Grouse and Cutty Sark blend in debt-crisis-hit Greece in the six months to September were down on the same period of its prior financial year. But the spokesman highlighted the fact that each of these brands had improved its share of a declining Greek market for Scotch.Portugal and Spain were also tough markets for Edrington’s whisky brands during the six months to September.The Edrington spokesman said that sales volumes in Portugal, of The Famous Grouse and Cutty Sark, were during the six months to September down 6% on the previous first half. He voiced Edrington’s belief that the market in Portugal would recover more quickly than that in Greece.Edrington meanwhile expressed its satisfaction that its Dominican Republic rum brand Brugal, acquired in a diversification move a few years ago, had cemented its market- leading position in Spain. The spokesman noted Edrington was now advertising Brugal in Spanish cinemas.Edrington said Brugal had a 20% share of the Spanish dark rum market by volume, and that its nearest competitor was Cacique on 16%. It said the Spanish dark rum market was down 3%.Edrington, which employs more than 2300 people and now has more than 60% of its workforce overseas, is owned by The Robertson Trust. The company noted yesterday that this charitable trust had donated £11.4m to various causes last year.The Edrington spokesman declined to be drawn when asked about the company’s view on plans by the SNP Government at Holyrood to introduce minimum pricing for alcohol.He said: “We would like to stay focused on the performance of the company internationally, rather than providing a comment on policy in Scotland.”

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Asian boom fuels distiller’s earnings

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