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Morrison Bowmore hails malt strategy

MORRISON Bowmore, the distiller behind the Auchentoshan, Bowmore and Glen Garioch malts, has lifted profits by seven per cent in a year which saw it invest in stocks to help meet future demand.

The Glasgow-based distiller, a subsidiary of Japanese drinks giant Suntory, booked pre-tax profits of £9.1 million for the year to December 31, accounts newly available at Companies House reveal.

The rise in profits came as turnover rose by 12 per cent, with the invoiced value of sales, net of taxation, increasing to £55.6 million from £49.8 million in 2008.

Chief executive Mike Keiller declined to comment on the results, beyond noting that "clearly the business is doing well". But prominent whisky writer John Lamond pointed to continuing success for the distiller in export markets such as Japan, the Americas and Europe.

The distiller notes in the accounts that its aim is to drive higher volumes and profitability on its malt portfolio "by continuing to concentrate our resources and investment behind Bowmore, Auchentoshan, Glen Garioch and McClellands."

It states: "The results for the 12 months to 31 December 2013 highlight the effectiveness of this strategy with all our single malt brands reporting a significant increase in volumes, turnover and profitability.

"Borrowings remain(ed) consistent during the year despite the company continuing to invest in stocks to meet the growing demand for our single malt brands."

Mr Lamond, author The Malt Whisky File and The Whisky Connoisseur's Companion, said Suntory's distribution power is a major asset for the distiller.

He said: "Obviously the backing of Suntory and Suntory distribution out in the Far East is very important for them. They do a fair amount in the Americas - Canada and the US - and they also do very good business in Europe. Their downturn didn't seem to be quite as deep as some of the other companies when Europe crashed in 2008."

Noting that Morrison Bowmore has not been as affected as other distillers by anti-extravagance measures in China, Mr Lamond added: "The Far East has done well with them and will continue to do well for them, with the backing of distribution like Suntory's.

"We saw Diageo buy United Spirits basically to give them distribution in India. With the backing of Suntory, they have got that sort of distribution, not just in Japan but in virtually every country in the Far East. They also do good business in South Africa. The markets they are in, other than China, are not shrinking at the moment. They are doing well."

Suntory flexed its muscle shortly after Morrison Bowmore's latest year end by acquiring Beam, the owner of Scotch whisky brands Teacher's, Laphroaig and Ardmore, for $16 billion (£9.8 million).

So far it is not clear how this will affect Morrison Bowmore, but Mr Lamond suggested it will ultimately spell some changes for the distiller.

He noted: "In the longer term, I can see economies meaning there will be a joining up of services.

"Obviously they won't want to upset agents in these markets who have dealt with them for years in the short term. There will be a medium term switch over to Suntory's own distribution arrangements."

Mr Lamond also raised the prospect of Morrison Bowmore acquiring Drambuie, which has been put up for sale by the MacKinnon family.

William Grant & Sons and Diageo have been linked with bids, but Morrison Bowmore has a formal link with Drambuie through its contract to produce the whisky liqueur at its base in Glasgow.

Mr Lamond said: "There are so many synergies there. You go past [Morrison Bowmore] on the train and it's emblazoned on the side of the building."

The latest accounts for Morrison Bowmore show the company employed an average of 223 staff during its last financial year, up from 208 in 2012.

Total staff costs rose to £8.88 million from £8.15 million, with the salary of the highest-paid director rising to £418,000 from £400,000.

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