WHYTE & MACKAY - DISTILLER OF THE YEAR
Whyte & Mackay is the current holder of the International Wines & Spirits V&S Trophy for ‘Distiller of the Year’, having garnered a highly impressive trawl of 2 trophies, 9 gold medals, 11 silvers, 7 bronzes and 6 commendations from a total of 35 entries.
It is a testament to the enduring quality of the Glasgow-based company’s products that it landed the title at a time of great commercial upheaval.
South African-born businessman Vivian Imerman has been at the helm of Whyte & Mackay for two years, and is chairman and chief executive, with overall control of the company. Imerman is currently one year into a five year restructuring programme, the aim of which is to make a lean, efficient Whyte & Mackay less focused on its current UK business and more international in outlook.
A recent re-financing deal with Bank of Scotland Corporate has helped offset the negative effects of the large debt burden incurred during a £209m management buyout from JBB (Greater Europe) in 2001.
This was the largest ‘mbo’ ever undertaken in Scotland, and resulted in the company being re-branded as Kyndal, though Vivian Imerman scrapped this name soon after taking control and returned to the familiar title of Whyte & Mackay Ltd.
According to Whyte & Mackay’s high-profile master blender Richard Paterson, “The ‘Distiller of the Year’ award could not have come at a better time for Whyte & Mackay. The company has been restructured and reformed, it’s been turned upside down, but we can still say that we are turning out the finest products. It does give you great credibility, beating Diageo, Allied and the like.
“We have undergone a restructuring process that is going to meet 2005-2010 head on,” he adds. “We’ve now got the Bank of Scotland behind us, and we’ve got the entrepreneurial spirit of Vivian Immerman, who has a fresh, dynamic approach and is prepared to put his money where his mouth is.
“I’ve been with this company for 35 years, I’ve never lost faith in it, and if I’d lost faith now I wouldn’t be here talking to you. We’re here to be a force to be reckoned with. Whyte & Mackay is not sitting on its arse.”
The firm of Whyte & Mackay effectively dates from 1881, when James Whyte and Charles Mackay acquired the wine and spirits division of the Glasgow firm of Allan & Poynter.Whyte & Mackay was in family hands until 1972, and subsequently underwent a succession of changes of ownership, ultimately becoming part of the Jim Beam subsidiary JBB (Greater Europe) plc.
In 1993 Whyte & Mackay acquired Invergordon Distillers for £382m, giving them the valuable prize of Invergordon grain distillery on the Cromarty Firth in the Highlands, along with Jura, Bruichladdich, Tullibardine and Tamnavulin distilleries. All but Jura were mothballed, with Bruichladdich and Tullibardine subsequently being sold off and reopened in private hands.
Whyte & Mackay currently operates Dalmore, Fettercairn and Jura malt whisky distilleries, along with the vast Invergordon grain spirit plant, which employs around 180 people, and turns out some 35.5 million litres of alcohol per annum.
Earlier this year, Bob Brannan was appointed group managing director of Whyte & Mackay, having previously worked as group finance director and operations director for William Grant & Sons, followed by spells as chairman of Ben Sherman and managing director of Eagle Taverns. Latterly, he acted briefly as chief executive of Rangers FC.
Brannan clearly shares Richard Paterson’s positive views about the changes at Whyte & Mackay, declaring “I’m hugely optimistic about the future of the company. We have great heritage, production facilities and brands. I think it’s underperformed relative to its potential for as long as I can remember. We’d like to diversify within the overall international spirits industry, buying national brands in countries where we already have a presence.”
Margins are notoriously tight in the private label market, particularly when dealing with the supermarket giants, and one criticism levelled at Whyte & Mackay is that it is too reliant on this particular kind of activity.
“Invergordon was essentially a private label business,” says Brannan, “so when we acquired it we acquired that business, and the capacity to service it. We’d like to make it less of an important part of what we do. Because of the pressures we think there are quite a lot of pretty poor private label products out there, and the situation will only improve if we can move pricing higher. It’s beginning to harm the prices of branded Scotch whiskies now. We’re all under terrible price pressure.”
According to Alan Gray, whisky analyst for Sutherlands in Edinburgh, “It will be very difficult to make Whyte & Mackay an international blend”, but Bob Brannan has greater optimism in the blend’s ability to punch above its weight in overseas markets.
“The Whyte & Mackay blend sells around 600,000 cases per year worldwide at present,” he says, “but we think it has great potential to do more. It’s number two in Scotland behind Famous Grouse, and they spend an awful lot more on marketing than we do. Internationally, our distribution network is not as strong as some, and we will be addressing that.
“It regularly comes out in the top three in blind tastings, and is the only Scotch whisky blend with a double maturation process. We emphasise it’s a very smooth whisky, and customer research clearly endorses that.
“In terms of our malts, there will be new packaging for Dalmore and Jura during the next 18 months or so, and new expressions. There will also be new packaging for Fettercairn, and there will be more work done on promoting and marketing it. We are also investing heavily in wood at the moment.”
Welcome news for whisky buffs is that the silent Tamnavulin distillery is to re-open. According to Brannan, “The process of getting it up and running has already begun. It’s our only Speyside distillery now, and we think we should have a Speyside in our portfolio. The malt category is growing phenomenally, and we’ve already got quite a lot of stock of Tamnavulin, so we can re-launch the brand when we want to. We think it’s a shame the distillery has been allowed to lie fallow for so long.”
Despite all the positive talk, however, Vivian Immerman’s vision of a leaner, meaner Whyte & Mackay inevitably comes at a price, and part of that price is an as yet unspecified number of job losses.
Richard Paterson says “Some people have written us off, and we’ve had some uncomplimentary press coverage, but turning a company around is a very sensitive and sometimes painful time for those involved.”
Bob Brannan, observes that “We are currently investing £30m in a new state-of-the-art bottling hall in Grangemouth, where one of our two existing bottling plants is situated. It should be completed by the end of the year, and we will transfer production from our existing Grangemouth plant beside the new one and from our Leith plant during 2006.
“We currently have bottling, packaging and warehousing facilities in Leith, as well as a sales and marketing operation. All bottling, packaging and warehousing will go to Grangemouth, and sales and marketing will move to our Dalmore House offices in Glasgow. The Leith site will be sold for development.
“We very much hope as many staff as possible will be able to transfer, as we value consistency of staff, but we are trying to improve efficiency – provide a better product at a lower cost.”
Paterson and Brannan both talk a good game, but it will surely take a while before observers are reassured about Vivian Immerman’s long term intentions regarding Whyte & Mackay. There is a popular perception that if the business can be turned around in the comparatively short term, then Immerman will be tempted cut and run with the profit.
Bob Brannan is emphatic that this is far from the case, declaring “We are investing for the long term future of the business. I think it’s suffered from numerous changes of ownership and management, and things have been done which have not always been in the long-term interests of the company.
“I absolutely believe Vivian Immerman has a long term interest in the business. I said to him before I joined ‘It will take 10 to 15 years to make this a strong company’, and he already knew and believed that.
“We have the opportunity as a private company to build a great business with great brands. Costs have been cut in the past, and distilleries closed, all as a result of short term-ism. We are building for the long term, not trying to turn the business around and get out. We are doing a lot because there’s a lot to do.”
Everyone with the best interests of the Scotch whisky industry at heart will surely be happy to raise a glass to Whyte & Mackay’s ‘Distiller of the Year’ award, and wish a secure and prosperous future for this historic company.
Whyte & MacKay cont...
