Edition 20 Autumn 2003 American Spies Go
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TM TM EDITION 20 AUTUMN 2003 YOU SAY POTATO photo—George Jackson Here’s an email from Dave Broom, the only opinionated whisky writer worth reading (come to think of it, the only opinionated whisky writer...) I see Bell's new incarnation is "a rich blend of pure malts" Can they make things any more confusing?? Discuss - d I wasn’t going to, but in discussion this morning (while asking if he knew any- thing about ‘Crocodile’ Dundee plc—he didn’t) Dave goaded me further. He was working on a piece about the categories of Scotch and would be arguing for the elimination of ‘pure’, leaving ‘single’, ‘vatted’ and ‘blended’ as the primary defi- nitions—with a further set of regula- tions, clauses & sub-definers clearly iden- tifying authentic ‘singles’ (those named from the distillery of origin) or those bo- gus, non-attributable singles with non- attributable names. Bogus ‘singles’ AMERICAN SPIES GO UNDERCOVER should not be allowed to be called ‘sin- After being rumbled by the world’s press, inspectors for the United States Defence gles’ but ‘pure’... and so on. Amongst other Threat Reduction Agency have taken to less obvious methods to monitor Scot- things, he proposes a quality ‘kite-mark’ land’s illicit production of Weapons of Mass Destruction [as, we might add, was that only the ‘pure’est ‘single’-‘singles’ first revealed on the cover of SWR19]. could carry. All with the aim of simplifying things for you lot, the punters. GLENCADAM THAT STORY Feeling mischievous I argued that, in the Privately owned whisky company Angus The WMD story made it into almost lay dictionary, there was nothing better Dundee has acquired the little known every national paper in the world includ- than ‘pure’, and so more attractive than east coast Glencadam Distillery which ing an editorial in the Independent and ‘single’ which is meaningless (and anyway was closed in 2000 as a result of Allied’s the whole of the (remaining) cover of the only half as good as a ‘double’). I coun- surplus capacity in distilling. Express. France’s Figaro also reported tered that ‘single’ should be phased out, Glencadam, which has already re- the story on its front page (with a tell- but not before ‘vatted’ (which half the started distilling, is the company’s sec- ing nationalistic glee). Bruichladdich’s whisky drinking world pronounces ond distillery joining Tomintoul which press cutting service reported an unprec- ‘watted’); though ‘vatted’ could be permis- they acquired in 2000. Angus Dundee edented degree of coverage. sible when describing the vatting of vari- are low profile players in the industry; The official response from ous casks (or ‘singles’?) from a ‘single’ dis- they trade in own label and bulk whisky the DTRA spies is that tillery prior to bottling (as a ‘pure’ or ‘sin- and are headed by Terrance Hillman, they have ‘no official in- gle’ but not as a ‘single-single’). formerly of Burn Stewart (see this edi- terest in Bruichladdich I have no problem with ‘a blend of pure tion’s interview feature). Distillery’ (well which malts’; it’s a blend of pure malts—but it one then?). When is time to work the whole thing out. TULLIBARDINE quizzed by public rela- Bad Boys this edition? The usual sus- Edinburgh property developers have tions agents eager to pects: Allied, Bacardi & Pernod—no malt bought Tullibardine Distillery, closed learn the trick, MD activity; and the numpties at Macallan— since 1994, to develop an up-market re- Mark Reynier said, too much too fast—again. They won’t give tail park headed by Baxter’s Foods. The “It’s just an Islay us (the UK) the latest replica—sorry, you new owners say they will finance whisky thing, a Bruich- can be justifiably pissed-off. production from the sale of land... laddich thing.” SCOTCH WHISKY REVIEW—Loch Fyne Whiskies, Inveraray, Argyll, PA32 8UD. www.LFW.co.uk PAGE 1 now inside the gates; a nice description. years after listing, when things were CL Financial have a lot of assets with ex- beginning to get sticky. My background THE PHOENIX posure to the Caribbean and they wanted is finance and law—and boy! Here I had to get a global rating. Beverages are a to shoot some trouble! The Scotch pri- way to get exposure to a number of mar- vate label market was going seriously kets around the world with a relatively negative in terms of pricing and we got low risk. I think there is going to be more to our worst position in 1997 but now consolidation in the drinks industry with have dug ourselves out of it. many other opportunities—now we have LFW: What went wrong? quite a deep pocket behind us. Pricing, pricing and pricing. Look at the CL moved into drinks in 1998 with the airline industry today—never been acquisition of Angostura who, in addi- fuller but making less and less money. tion to the famous bitters brand have a Why do people do that? In the nineties substantial rum distillery in Trinidad. the Scotch industry got into the same They are a very significant supplier to pickle (still is) by cutting prices. When Bacardi (who don’t actually produce any we started there were margins of up to rum themselves). 45%, now we’re down to almost nothing We also have a stake in Belvedere S.A. and still going down. who own three Polish vodka distilleries Private label supermarket supply be- and enjoy a big part of the domestic came an interesting sector in the late Polish vodka market. eighties. Supermarkets led by Marks & Ian Bankier has tired of being in the LFW: What are Angostura bitters? Spencer got the notion that a non- spotlight recently but fortunately They won’t give me the recipe! It’s a mix- branded value-for-money offering was had just one interview left in him ture of spices, herbs, and botanicals on what the consumer wanted. This busi- for the SWR. an alcohol base. It started as a medici- ness made Invergordon in particular lots LFW: What is your job? nal compound by a German, Doctor of money and Burn Stewart was a player I am chief executive of CL World Brands, Siegert, and by the turn of the century as well. But it became too interesting a new company created at the beginning it became a part of cocktails. Soon the and other significant players moved in, of 2003 to hold all of the drinks indus- British aristocracy took it for their pink creating turf wars while buying busi- try investments of CL Financial of Trini- gins and so it travelled around the world. ness; you can’t get into that sort of low dad. This includes the best part of An- The UK is the third biggest market, cost trade except on cut-throat pricing. gostura, a majority stake in Todhunter mainly in cocktail bars. One of our tasks They brought the price down and that’s of Florida—a major producer of rum and is to find new uses: cooking, coffee, ice the way it’s been going ever since. other alcoholics, cooking wines and vin- cream, fruit, water… an ‘Angostura Similarly with bulk whisky. In the good egars—the whole of Hine, two French Spring’—water with a couple of dashes old days bulk to Japan made millionaires distribution companies and Burn in it—is very nice! of some people. Today bulk is cut-throat, Stewart. There are four operating bases: Angostura is a high profile company and penny sensitive and not sustainable if you France, the Caribbean, United States one of the jewels in the Trinidad crown, want to create equity in your business. and Scotland. Each is a fully-fledged it’s very prestigious. At present I go to Our response has been to get out of it. company with its own managing and Trinidad every second month. Burn Stewart made spectacular losses sales directors and interfaces with a Angostoura is part of my charge. between 1997 and 2002—our margins network within CL World Brands, now LFW: Were you at the start of Burn were sliced while we were dropping busi- headquartered here in East Kilbride. We Stewart? ness. By shaking off the low-end business in turn report to CL Financial. No, I started in 1994. Originally Burn we lost 35% of volume in one year. Be- LFW: What is CL Financial? Stewart was a small whisky-broking cause of the investment process unique A conglomerate with four prime inter- company owned by the Hillman family to Scotch whisky it took three or four ests: energy (oil & gas), financial serv- who were well known in the industry. years to change direction, but we gener- ices, real estate and now beverages. The In 1988 Bill Thornton, formerly of Hiram ated enough cash to survive that process. group has turnover of billions of dollars Walker, bought Burn Stewart as he By and large we are now out of it. These and has thousands of employees. wanted a vehicle to create a fully verti- days Invergordon are the main provid- It is basically the creation of Mr. cally integrated Scotch Whisky company ers of bulk, with Angus Dundee and Laurence Duprey, a visionary and then to buy some brands. He did Inver House heavily involved as well. Trinidadian of French extraction who very well—the only person since the war LFW: How do you get out of that sort owns most of the stock and likes to cre- to create such a whisky company—but of business? ate and build things and a better the brand-buying ambition was never You price yourself out, make a stand, and economy for Trinidad and Tobago; his fulfilled as events in the marketplace look critically at your returns on capi- enterprises represent a very substantial conspired against him.