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Chivas Brothers boss confident of growth

CHRISTIAN Porta, executive chairman of Chivas Brothers, said he remains confident in the continued expansion of Scotch whisky sales in emerging markets despite recent slowing growth.

SUCCESS DISTILLED: Chivas Brothers chief Christian Porta with Scottish Cabinet Minister Richard Lochhead at Glen Keith.
SUCCESS DISTILLED: Chivas Brothers chief Christian Porta with Scottish Cabinet Minister Richard Lochhead at Glen Keith.

Mr Porta, speaking as he attended the official re-opening of Glen Keith Distillery, said the company would also press on with plans for a new distillery at Carron in Speyside.

Mr Porta, who leaves next month to run Chivas's parent Pernod Ricard's European business, said the pace of growth of Scotch in global markets had surprised him during his nine years in charge.

He said: "It is true. There has been over the past six to nine months a slowdown generally speaking, a slowdown in the world economy and a slowdown in China and our sales are a little bit lower than we would have expected."

But he added: "It doesn't change our view of the potential for Scotch whisky in the long term.

"That is why we are opening the Glen Keith Distillery and that is why we have confirmed we are opening a new distillery at Carron."

China in a few years time "will be a much wealthier country than it is now", he said.

"In India it is the same thing," he added. "In Africa the number of middle class consumers is growing."

The sales slowdown, particularly in Asia where Pernod Ricard is the leading international spirits house, has weighed on the French company's share price since March.

Mr Porta noted that whisky companies have to plan years ahead.

Spirit must be aged for three years to qualify as whisky and Pernod's leading brand Chivas Regal takes spirit at a minimum maturity of 12 years.

"You cannot run a business like Scotch whisky and make permanent changes in direction. It is a long-term business," Mr Porta said.

Mr Porta said that he was proud of the way Pernod had completed the integration of Seagram and then Allied Distillers during his nine years at the helm of Chivas, while the pace of sales growth has surpassed his expectations.

"It is over that period we have started to make strong in-roads into markets in Asia, in South America, in Eastern Europe," he said.

Sales of Chivas Regal have grown from 2.7 million cases in 2003 to 4.9m last year.

"Did we forsee that we would sell close to five million cases in 2012? Not necessarily. It has had good growth," Mr Porta said.

Glen Keith was mothballed in 1999 under Seagram.

Chivas would not disclose how much it has spent re-opening the distillery but Mr Porta said it was a "good part" of its £40m capital expenditure for this year.

Work included the installation of new malt storage facilities and the installation of six additional washback vessels where fermentation takes place, bringing the total to 15. The distillery's existing six stills were also refurbished.

Capacity at the distillery has been expanded by 50% to six million litres of alcohol. It has been producing spirit since April and production is being gradually ramped up with the distillery now nearing full capacity.

The whisky will be used in blends such as Chivas Regal and Royal Salute with no plans to release a single malt whisky from the new spirit.

Local MSP and Scottish Cabinet minister Richard Lochhead said: "I am always happy to see a local distillery like Glen Keith being brought back to life – it is a great boost to the local area."

Chivas now has annual malt whisky distillation capacity of 60m litres of alcohol.

The opening comes after the completion of the £10m expansion of Glenlivet Distillery in 2010, increasing its distillation capacity by 75%.

In 2012 Chivas expanded Glenallachie, Longmorn, Glentauchers and Tormore distilleries.

A new distillery at Carron on the River Spey will open in 2014 after receiving planning permission in April. Across the UK, Chivas employs 1600 people and has an inventory of more than 6m casks of spirit.

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