Scotch whisky sales drive growth for Distell

DRINKS group Distell has highlighted a strong performance by its malt whiskies as it expands in Scotland but noted uncertainty about the potential impact of Brexit.

In the latest accounts for Distell International, the South African-owned group said its Scotch whisky portfolio had delivered strong revenue and profit growth, with single malts led by Bunnahabhain and Deanston doing particularly well.

Distell International grew sales to £114.7 million in the year to June 30, up from £98.5m last time.

The success was achieved amid a period of strong demand in overseas markets for single malts. This has encouraged a range of overseas firms to invest in Scotch producers.

Distell provided a big vote of confidence in the long-term prospects for the market in 2013 by acquiring Burn Stewart for £160m.

The business brought with it distilleries on Islay, Mull and in Deanston, near Stirling, as well as a bottling hall in East Kilbride. Its brands also include the Scottish Leader blended Scotch.

In their strategic report in the accounts, directors of Distell International noted the business has been refocused on its higher-margin premium spirits portfolio in the expectation this will support growth in sales and profits.

They said the company had begun a major capital investment programme in the latest financial year. It is in the process of expanding the East Kilbride base with the construction of a new blending facility and warehousing, and building a new visitor centre at Bunnahabhain on Islay.

The company sanctioned the investment required in spite of the uncertainty about how Brexit will impact on whisky exports.

In the accounts, directors noted the greatest risks and uncertainties faced by the group included “uncertainty over the United Kingdom’s exit from the European Union”. They said board members ensure adequate and appropriate risk mitigating policies and procedures are implemented.

The report was signed on December 11, days after Boris Johnson’s victory in the general election. Mr Johnson’s decision to put a one-year limit on trade talks with the European Union has reignited fears of a no-deal Brexit.

Distell International made £9.5m profit before tax in the year to June 30, against £10.2m last time.