Exports of the group's flagship, The Famous Grouse, which accounts for 75 per cent of operating profits, rose 14 per cent in volume and 24 per cent in value.
More than 90 per cent of these exports go to Europe, North America and the Far East. Demand this time was strong from the US, France, Greece and Thailand. The group said 45 per cent of overall sales were overseas, up from 40 per cent, driven largely by the group's four-year alliance with Remy Cointreau.
In the year to 31 August, Highland saw taxable profits rise 10 per cent to pounds 42.5m ( pounds 38.8m) on sales up 3 per cent to pounds 175.8m. The total dividend rises 10 per cent to 7.26p (6.6p).
Brian Ivory, chief executive, said despite difficult trading The Famous Grouse held its 14 per cent market share in Britain. This was against the background of United Distillers launching a new eight-year-old Bell's Scotch last spring at the same price as the previously undated brand.
Mr Ivory said: 'The market has very quickly settled down and we have no doubt about our ability to compete.' It was good, he added, to see another big brand putting significant money behind its development. 'There's room for all of us,' he added.
Highland said it would not become involved in cut-price whisky wars in this country, although it had boosted promotions and advertising spending by 15 per cent. Mr Ivory said the company would maintain its price differential in the run-up to Christmas.
During the year bottled single malt sales, particularly of Highland Park, advanced well. Sales of new fillings and mature whiskies held steady, although profits were down due to competitive market conditions.
The figures were helped by increased profits from Robertson & Baxter, the whisky blending business in which Highland has a 35 per cent stake.
Highland also dropped a hint about diversification, saying there were opportunities 'in other premium spirits'. Eric Goodwin, chairman, said the matter was being considered, 'but we are not saying whether by acquisition or producing a new product'.
Guy Farmer, drinks analyst at Kleinwort Benson, forecasts profits of pounds 46m this year and pounds 50m the year after. He said: 'It is very interesting that Bell's has apparently not been able to shift Highland Distilleries' market share.
'Tentatively, it looks rather more encouraging for Highland than for Guinness.' The latter group owns Bell's through its United Distillers subsidiary.
Some industry experts, however, believe that the Christmas season, when there is more bulk buying, will be the real test for Highland against the renewed Bell's threat.
Anticipating the November budget, the company reiterated the industry view that it was unfairly taxed against competing foreign drinks such as imported wine.
Mr Goodwin said the European Union had shown 'entrenched favouritism in favour of wine' and that the Government's tax policy was damaging both Britain's balance of payments and a leading industry.
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