SCOTCH whisky distiller Edrington has noted it faces “significant political and economic volatility and uncertainty” but said it is well placed for growth in coming years amid buoyant demand overseas.
Announcing strong growth in annual sales and profits, the Glasgow-based giant underlined confidence in a strategy that involves focusing on what it calls super premium spirits.
These include brands such as The Macallan that are expected to capitalise on the growing demand for products seen as having cachet by affluent consumers in countries ranging from China to the USA.
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New chief executive Scott McCroskie declared Edrington made further progress towards building the world’s leading portfolio of “exceptional super premium” brands in the year to March 31.
The company grew sales revenues by nine per cent to £679.8 million during the year. Profits rose 4%, to £91.6m before one-offs.
“The business has delivered strong international growth that reflects continuing consumer demand for our products, particularly in China, South East Asia and the USA, which is the world’s largest market for premium spirits,” said Mr McCroskie. His predecessor Ian Curle stood down at the end of the latest financial year.
Edrington generates around 95 per cent of its revenues from exports. Europe also represents an important market.
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The company is monitoring global economic and political developments closely.
“This is a time of significant political and economic volatility and uncertainty,” noted Mr McCroskie.
He added: “Like many businesses with significant trade with Europe, we are working hard to be as prepared as possible for any outcome from the ongoing Brexit situation.”
A no-deal Brexit would result in the UK trading with European Union countries on World Trade Organisation terms, under which tariffs would be applied to exports.
Edrington did not give any indication of whether the prospect of Brexit had had any impact on revenues.
“We are monitoring the ongoing trade disputes between the US and Europe to prepare for any potential tariff impact that could affect Scotch Whisky,” added Mr McCroskie.
However, the tone of the results announcement made clear directors believe the firm has a portfolio that should allow it to prosper under its Edrington 2025 strategy, even if challenges arise.
Super-premium is the fastest growing drinks category globally.
Read more: Distiller ramps up production after netting lucrative China deal
“There is much to celebrate in the last year for Edrington’s portfolio of malt whiskies and even more to look forward to in the future, with transformation happening across all brands,” said Mr McCroskie.
He noted Edrington invested heavily in The Macallan in the latest year, during which it opened a new distillery and visitor experience for the brand on Speyside.
“The results of this effort have resulted in strong growth for The Macallan with global demand once again outweighing supply,” said Mr McCroskie.
Edrington launched a 50-year-old expression of its Highland Park malt and opened the brand’s first ever shop in Kirkwall in Orkney, where the spirit is distilled.
Edrington raised funds to support investment in key brands by selling the Cutty Sark blended whisky to French spirits group La Martiniquaise-Bardinet.in November.
The company disclosed yesterday that it made a £68m gain on the sale. It booked a £22.3m profit on the sale of The Glenturret malt whisky to Swiss wine company Art & Terroir in December. The deals signalled strong interest in whisky assets among overseas investors.
Read more: Whisky giant sells Scotland's oldest working distillery
Sales of The Famous Grouse blended whisky fell last year amid challenging conditions in that market segment but it is still seen as an important constituent of the Edrington portfolio. Mr McCroskie said The Famous Grouse is still a major force and remains the leading blended Scotch in the UK and six other markets.
Owned by the Robertson Trust, Edrington employs 850 people in Scotland, out of a global total of 3,200. The business was founded by William Robertson and John Baxter in Glasgow in 1861.
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