Highland rightly recognises that these days selling whisky is all about marketing and building brand names. To this end it has pumped millions into a new advertising campaign. The jury is still out on whether this will pay off. At the moment all it has done is depress profits, although there are signs that the initiative is having a beneficial effect on sales.
The economic crisis in Asia raises another question mark over Highland's international ambitions. The direct impact on sales has so far been small. But the slump in spirit sales in the region has thrown Remy Cointreau, which distributes almost two-thirds of the group's whisky, into turmoil. Throw in the huge competitive threat of Diageo, formed by the merger of Guinness and GrandMet, and it will not be plain sailing for Highland.
These worries have been reflected in its poor share price performance recently and the shares slipped another 4p to 267.5p yesterday after the group announced virtually flat profits of pounds 25.1m for the six months to February. Analysts forecast full-year profits of around pounds 45m, putting the shares on a prospective p/e ratio of 12. The shares remain a long- term hold, although investors may have to be patient to see the fruits of Highland's investment programme.