Flood fails to dampen spirits
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.”