Flood fails to dampen spir­its

The Herald - - NEWS - SCOTT WRIGHT

IT was less bap­tism of fire, more im­mer­sion by wa­ter. Martin Leonard was just days into his role as manag­ing di­rec­tor of In­ver House Dis­tillers when the of­fice at its Air­drie base was struck by flood. To make mat­ters worse, he had just ar­rived in Thai­land, where he was at­tend­ing a con­fer­ence with par­ent com­pany In­ter­na­tional Bev­er­age Hold­ings, when the news reached him.

“I stepped off the plane in Bangkok to a phone call from our CFO,” Mr Leonard said. “He was in Air­drie deal­ing with a flood in the of­fice [af­ter] the wa­ter tank leaked. It was quite se­ri­ous in that, for a brief pe­riod we had no IT and com­mu­ni­ca­tions. [But] it was a good ex­am­ple of peo­ple pulling to­gether.”

While the in­ci­dent wrought thou­sands of pounds worth of dam­age, with ceil­ings, fur­ni­ture and IT equip­ment re­quir­ing to be re­placed, it has sin­gu­larly failed to mar Mr Leonard’s early months in the job. The whisky ex­ec­u­tive, who was of­fi­cially un­veiled as Gra­ham Steven­son’s re­place­ment in July, has en­joyed the tran­si­tion to a more gen­eral lead­er­ship role at the busi­ness.

“It gives you a dif­fer­ent per­spec­tive on the busi­ness,” he said. “It does in­volve a bit of learn­ing for me, in that you need to be closer to some of the com­mer­cial as­pects, but I quite en­joy it. It’s good to have a change in life ev­ery so of­ten, and do some­thing a bit dif­fer­ent.”

Not that he was new to the Old Pul­teney and Spey­burn dis­tiller when he be­came manag­ing di­rec­tor, hav­ing held key pro­duc­tion roles at In­ver House since join­ing in 2000.

Prior to suc­ceed­ing Mr Steven­son, he spent a decade as op­er­a­tions di­rec­tor. And be­fore that, he had 10 years with Di­a­geo, orig­i­nally join­ing as a re­search sci­en­tist when the com­pany was known as United Dis­tillers af­ter qual­i­fy­ing as a chemist.

As part of his post-grad­u­ate stud­ies, he used tech­niques to an­a­lyse volatile pes­ti­cides, the same pro­cesses for which are used to an­a­lyse flavour com­pounds in whisky. Join­ing the in­dus­try, Mr Leonard said, opened the door to ca­reer de­vel­op­ment, not­ing that af­ter a cou­ple of years he had moved into bot­tling, dis­till­ing and pur­chas­ing.

His ar­rival in the top job at In­ver House comes as the wider in­dus­try faces some big chal­lenges, one be­ing the im­mi­nent in­tro­duc­tion of a min­i­mum unit price for al­co­hol in Scot­land. The Scotch Whisky As­so­ci­a­tion (SWA) was fi­nally forced to ad­mit de­feat in its long bat­tle to op­pose the pol­icy when its fi­nal ap­peal was re­jected by the Supreme Court be­fore Christ­mas.

Mr Leonard said the in­dus­try is con­cerned about the im­pact it could have in ex­port mar­kets, where the SWA is en­gaged in ef­forts to bring down im­port bar­ri­ers for the spirit.

Some 95 per cent of the Scotch whisky in­dus­try’s out­put is sold overseas.

“I think that is some­thing that per­haps un­der­stand­ably the Scot­tish Gov­ern­ment isn’t fo­cused on, but for an in­dus­try that drives so much em­ploy­ment, and so much rev­enue for Scot­land and the UK, it is one [is­sue] that is quite im­por­tant for us,” Mr Leonard said.

In­ver House, which em­ploys around 200 staff across its dis­till­ing, bot­tling, ware­house and of­fice func­tions, ex­ports to around 90 coun­tries. Mr Leonard pointed to Rus­sia, fol­low­ing a pe­riod of po­lit­i­cal in­sta­bil­ity, and Poland as growth mar­kets.

And in the Far East, he un­der­lined the dis­tiller’s as­pi­ra­tions to build sales across Asia with the cre­ation of its own distri­bu­tion op­er­a­tions in Viet­nam and Thai­land. China is very much on the radar.

He said: “Up to now we have not re­ally had a strong po­si­tion in China, but with the sin­gle malts we be­lieve we can make some progress there. So we’re look­ing at a new dis­trib­u­tor in China.

“Prob­a­bly the fi­nal one I’d men­tion is In­dia. Again, from a rel­a­tively small base that mar­ket con­tin­ues to grow quite quickly.

“For us it’s not a mar­ket re­ally for blended Scotch whisky, there are a lot of play­ers in that mar­ket. But in terms of our brands the sin­gle malts would be the area of fo­cus there, and rather in­ter­est­ingly Caorunn Gin.”

He added: “We’re not talk­ing huge vol­umes at the mo­ment, but it is grow­ing quite sig­nif­i­cantly.”

But it is not just im­port tar­iffs which are po­ten­tially block­ing its path in In­dia.

Two states in In­dia re­cently in­tro­duced pro­hi­bi­tion, and there is also the so-called “high­way ban”, which ef­fec­tively bans the sale of al­co­hol within 500 me­tres of high­ways.

Some dis­rup­tion, mean­while, has been caused by de­mon­eti­sa­tion, a move by the In­dian Gov­ern­ment to crack down on tax avoid­ance by re­mov­ing higher de­nom­i­na­tion notes.

“It had some im­pact on us be­cause we sell some blended malt for IMFL (In­di­an­made for­eign liquor) prod­ucts,” Mr Leonard said.

“It’s a com­plex mar­ket. I think there is still a job to do for the SWA.”

Else­where, In­ver House re­cently closed its own distri­bu­tion ve­hi­cle in the key US mar­ket in favour of work­ing with a third party, 375 Park Av­enue Spir­its, part of the Saz­erac Group.

As part of the change, Mr Leonard said there will be a re­in­force­ment of ef­forts to mar­ket its Spey­burn malt brand in North Amer­ica, adding that “[Old] Pul­teney and Caorunn are re­ally im­por­tant in that mar­ket as well.”

While growth in in­ter­na­tional mar­kets is clearly a ma­jor fo­cus for the dis­tiller, Mr Leonard said In­ver House is acutely aware of the role in plays in sup­port­ing em­ploy­ment in com­mu­ni­ties across Scot­land.

In Air­drie it em­ploys around 80 staff in is main of­fice and 70 in its bot­tling and ware­hous­ing op­er­a­tions. About 50 are em­ployed at its five dis­til­leries, which in­clude Old Pul­teney in Wick, Bal­me­n­ach in Spey­side, and Bal­blair in Ross-shire.

“You end up play­ing quite a strong role in those com­mu­ni­ties and I think we al­ways try to make sure we are seen as part of those com­mu­ni­ties as well, be­cause as an in­dus­try we take a very long-term per­spec­tive,” Mr Leonard said.

“I keep say­ing that, just now for [Old] Pul­teney we are try­ing to work out what we are go­ing to sell in 2029, and the only thing we know is that we are go­ing to get it wrong – we are ei­ther go­ing to have too much or not enough.

“If we get it ex­actly right it will be by luck, rather than de­sign.”

Martin Leonard is rel­ish­ing the top job at In­ver House Dis­tillers. He first joined the firm in 2000.

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