Overseas demand fuels distiller’s record profits
William Grant & Sons boosted by the success of top spirits in USA and Asia
SCOTCH whisky distiller William Grant & Sons has posted record profits amid booming demand for premium spirits overseas and said it expects to achieve continued growth this year.
The family-owned firm made £177.2 million profit before tax in 2015, up 6.7 per cent from £166.1m in the preceding year helped by surging sales of the flagship Glenfiddich single malt and Hendrick’s gin.
New chief executive Simon Hunt said the growth had been achieved against a challenging backdrop, citing increased volatility in areas such as the Middle East and Africa and strong competition.
But the impact of this was more than offset by the success of spirits that the company has positioned to capitalise on the growing popularity of what are deemed premium products among affluent consumers around the world.
Drinking aged single malts has become a way for people in fast-emerging economies such as China to show they have arrived.
The company, owned by the fifth generation of the founding Grant family, said: “Demand for super premium spirits, particularly in the USA and Asia, remained robust where the markets remained buoyant.”
Glenfiddich did especially well, with sales volumes increasing by five per cent year on year.
William Grant & Sons said Hendrick’s, which it called the world’s leading super-premium gin, continued to grow rapidly across the world.
The six per cent growth in total sales, to £882.5m from £832.6m, also reflected the benefits of the decision to focus on its core portfolio and reduce the distribution of brands owned by other firms.
Mr Hunt, who succeeded Stella David in February, said the company’s success was driven by its constant focus on building brands and investing in them for the long term.
He added: “We are well positioned to continue our growth in 2016 and beyond.”
The results provide further evidence of the success that Scottish drinks firms have been achieving in established markets such as the US and in emerging areas in the era of globalisation.
Earlier this month, the Scotch Whisky Association reported that the value of exports to the US – the industry’s biggest market by far – surged by nine per cent to £375.4m in the first half of the year.
Scotch exporters have received a boost in recent weeks from the fall in the value of the pound following the June vote for the UK to leave the European Union. Last week, Diageo said Scotch whisky brands such as Johnnie Walker were key drivers of growth as its current financial year started well.
However, David Williamson, director of public affairs at the Scotch Whisky Association, told MSPs yesterday the body had argued strongly for the UK to remain in the European Union.
He noted a third of the industry’s exports go to countries that belong to the EU single market.
“Retaining the best access to and influence within that market is very important to our members,” said Mr Williamson.
He warned that the Brexit vote had ushered in a period of change and uncertainty for the industry which has benefited from the trade deals agreed by the EU.
But Mr Williamson noted that the Brexit decision could create opportunities over the longer term, if the UK has more freedom to agree trade deals that would suit the country’s firms.
“The challenge for us and the opportunity therefore is that there are trade deals revisited or struck for the first time with markets with the biggest potential commercial opportunity for Scotch whisky going forward,” said the industry veteran.
He added: “A top priority for the future would be some sort of trade deal with India, which could be a massive opportunity for the Scotch whisky industry.
“We have currently got one per cent market share but we’ve got 150 per cent tariff. If we remove that or reduced it significantly that could be transformational for the industry.”
Mr Hunt joined William Grant & Sons in 2007, initially as managing director, North America,
In 2014 the group bought Edinburgh-based Drambuie from its founding Mackinnon family, severing the link dating back to 1745.
‘‘ A top priority for the future would be some sort of trade deal with India, which could be a massive opportunity