By Scott Wright
THE managing director of Gordon & MacPhail, the Scotch whisky distiller and merchant, has signalled hopes that the US election victory of Democrat Joe Biden could bring an end to damaging import tariffs on single malt in the industry’s biggest export market.
Ewen Mackintosh was commenting as Speyside Whisky Distributors, which trades as Gordon & MacPhail, cited the tariffs, along with Brexit uncertainty and the early impact of Covid-19 in Asia, among the range of “global and domestic headwinds” it faced as sales and profits fell in the year ending February 29.
However, despite the continuing effects of the pandemic, Elgin-based Gordon & MacPhail underlined its confidence in the future prospects for the industry, citing its investment in the construction of a second Speyside distillery as evidence of its long-term vision.
Work is continuing on the development of The Cairn, which is on track to begin distilling at the end of next year. It will become Gordon & MacPhail’s second distillery, joining the Benromach in Forres which it acquired in the early 1990s.
The 25 per cent import tariff on single malt in the US has cost the industry around £330 million in lost exports since the tax was introduced by the Trump administration in October 2019 as part of an ongoing dispute with the EU over aircraft subsidies.
Asked if the arrival in the White House of President-elect Biden will boost the industry’s hopes of ending the tariff, Mr Mackintosh said: “I hope so. His [Joe Biden’s] rhetoric on tariffs is different to Trump’s. Hopefully, we will see some progress.”
Noting that the industry has been dragged into a situation that was not of its making, Mr Mackintosh added: “Hopefully the discussions can be more meaningful about how we can get out of this particularly destructive set of tariffs for our industry.
“Everyone is still having to work with the current impact of Covid, but it has been a bit of a double whammy… in the US market.”
New accounts for 125-year-old Gordon & MacPhail show total sales dipped by 18% to £33.7 million, with pre-tax profit falling to £9.8m from £15.6m the year before.
The venerable company, which established its name as a whisky blender and bottler, cited the impact of a strategic move on UK sales, which dipped to £20.6m from £26.7m following a decision to exit wine and beer wholesaling to focus on premium spirits.
In the international arena, sales fell to £13.1m from £14.2m but the company noted that markets began to show signs of recovery as they emerged from coronavirus restrictions at different stages.
Asked if he is concerned the UK could yet exit the EU without securing a deal with Brussels, Mr Mackintosh said: “We just have to be really pragmatic on it. We had the same scenario when we were coming up to the end of the calendar year, and there was a degree of [asking] what did the future look like with Brexit.
“There is no doubt we will probably ship more over the next couple of weeks just to make sure we have stock in market, [to] make sure distributors have plenty of stock to see them through. We understand some of the logistical challenges we will have around getting product in come the first of January. There is extra labelling we will have to put on products. Thereafter I think it is just a case of taking each step as it comes. We will just have to roll with the punches.”
Commenting on trading in the firm’s current financial year, Mr Mackintosh noted that the impact of Covid first seen in the last quarter of 2019 had continued into 2020. However, he said sales have proven to be “significantly better than we forecast in March”.
He said: “Demand for whisky is still strong. There has just been challenges around the hospitality trade and the terrible impact of Covid on that sector. But we have certainly seen an uplift in buying Scotch online though the speciality whisky stores etcetera.
“A lot of our strength is our ability to take a longer term view on things. The new distillery is a real symbol of that long-term approach we are looking to take.”
Mr Mackintosh conceded Christmas, traditionally a strong period for domestic sales, would be “challenging” in the UK, notably for the on-trade, though said Gordon & MacPhail should benefit from its exposure to the off-trade and gifting market.
“But it is probably better than what we anticipated it to be,” he added. “Year to date, we are really happy with the business that has come through.”
The company said it had sold £7m of mature whisky to help finance its new distillery.
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