EDRINGTON, the Glasgow-based Scotch whisky distiller, has defied political and economic volatility in key markets to hike profits by nearly one-third to £91 million.
The owner of The Macallan and The Famous Grouse declared it had also shrugged off fierce market competition as it recorded a “year of significant growth” in the period to March 31.
The distiller highlighted strong sales and volume growth for its top selling malt, The Macallan, as group revenue increased by six per cent to £668.1m. And it declared The Famous Grouse had “strengthened its leading position” in the UK blended Scotch market.
Chief executive Ian Curle said increased investment in brand marketing, up 18 per cent to £110.7m, alongside more focus on innovation and consumers led to an “encouraging performance”.
However, mulling the trading backdrop, the distiller warned of the impact of continuing political uncertainty in export markets.
Writing in the group’s annual review, published yesterday, Mr Curle said: “The political and economic landscape remained very uncertain. 2016 was the fifth consecutive year of sluggish trade growth and the year with the weakest performance since the aftermath of the 2008 global financial crisis.
“Political uncertainty was evident in a number of key markets. The UK’s decision to leave the European Union has added to this uncertainty.”
Outlining the industry’s approach to Brexit, Mr Curle said it has urged the UK Government at every opportunity to “reach an agreement that provides as frictionless a future trading agreement with the EU as possible.”
Mr Curle, who said growth has become difficult in some markets because of “deeper and more frequent price promotions”, added: “As the new UK Government embarks on negotiations we will work with industry colleagues to grasp any trading or regulatory opportunities that arise from Brexit.”
The latest figures on exports from the Scotch Whisky Association showed there was a four per cent rise in overseas sales to above £4 billion in 2016.
Malt exports grew by 12 per cent to exceed £1bn for the first time and Mr Curle noted this bodes well for The Macallan and Highland Park, as well as The Glenrothes brand which recently returned to the Edrington fold.
A new £100m distillery and visitor centre for The Macallan, which grew revenue by seven per cent last year, is due to be completed this year. Edrington said it now has 100 per cent control of its global duty free market operation for the brand after buying out the remaining shares in Edrington Webb Americas, the travel retail joint venture.
Elsewhere in the portfolio, Mr Curle said in the review that The Famous Grouse and Cutty Sark, which grew its profits, will benefit from increased marketing, noting that the brands are “poised to capitalise on any upturn in the blended category.”
And he said its Brugal rum brand is set up to carry on the momentum it had built up last year, during which it enjoyed “significant volume and profit growth” in its core markets of The Dominican Republic and Spain.
Mr Curle added: “Despite short-term uncertainty, we are confident about the medium and long-term prospects for the business. With its premium brand portfolio, proven strategy and management capability, Edrington has established the necessary momentum to deliver further growth.”
Edrington notes in the review that the value of its inventories increased by £24.5m to £456.9m as it continued to invest in whisky stocks to support the long-growth of its brands.
The period saw it book exceptional costs of £8.6m relating to the consolidation of its head office, including its sales and marketing function, to 100 Queen Street Glasgow, which subsequently led to it closing its West Kinfauns office in Perth.
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