Whisky firm waits for merger fallout

Glenmorangie, maker of the eponymous malt whisky, is ready to pick up any drinks brands dislodged as a result of the pounds 24bn merger between Guinness and Grand Metropolitan. Speaking as the company announced a 19 per cent rise in profits for last year, Geoffrey Maddrell, chairman, said: "There is bound to be some fallout as a result of the merger. We're monitoring the situation carefully and if some appropriate brands come up for sale we would look at them."

The company said it did not underestimate how much the merger could change the dynamics of the whisky market. But there would be opportunities in the short term for small and nimble operators to take advantage of the inevitable period of disruption during the integration of the two companies. Earlier this year Glenmorangie paid pounds 7m for Allied Domecq's mothballed Ardbeg distillery in Islay, which it now reckons is valued at pounds 8.9m.

The profits rise from pounds 6.57m to pounds 7.8m in the year to March came on the back of its whisky sales growing at around double the rate of the market. The company said its volumes jumped by 20 per cent last year compared with a 10 per cent rise in worldwide demand for malt.

The three "wood finishes" launched last year - Glenmorangie part-matured in port, sherry and madeira casks - had grown to around 10 per cent of the malt's overall sales of around 200,000 cases, the company said. The new tastes were introduced to tempt new drinkers, particularly women and younger age groups. Peter Darbyshire, managing director, said Glenmorangie was now the fastest-growing spirit in America after Hennessy Cognac, with growth of 40 per cent against 25 per cent for the market.

He said younger, more affluent drinkers were "leapfrogging" whisky blends and moving straight on to malts.

The figures were broadly in line with expectations. Alan Gray of Edinburgh brokers Sutherlands said the company had done remarkably well in the face of weak pricing in the market. He said the 45 per cent increase in sales of bottled whisky and 22 per cent reduction in bulk sale to blenders and other bottlers showed that the quality of earnings was improving. However, a pounds 617,000 loss from associates in India and China was higher than he had expected. Further big losses and the company was likely to consider winding up the Indian operation, he suggested.

Glenmorangie's pounds 320,000 charge for the Indian joint venture writes off the investment, taking total losses to pounds 800,000 over the past three years.

Shares in the family-controlled company, known until last year as Macdonald Martin Distilleries, remained unmoved by the figures, with the limited voting A shares at 945p and the B shares at pounds 10.65.

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