Comment - Spirits - Seeing Through the Islay Mist

By Patience Gould | 12 July 2012

Patience Gould is keen to snap you romanticists back into the real world. Brace yourselves...

The news that Remy Cointreau is set to acquire Bruichladdich, the Islay malt distillery, has been met with much wailing and gnashing of teeth. Nothing it seems can incite the sentiments more keenly than a pretty, ‘fiercely independent’ distillery falling into foreign hands – add the fact that it’s based on Islay and, well, it’s almost too much to handle.

There must be something in the Islay air that kindles these emotions or something in the characteristically peaty dram that clouds the judgement with mists of romanticism. I could go on, but I won’t. Let’s get this straight. Islay is a fine island and its prime business of producing malt whisky has never been in better shape – and that is in large part thanks to foreign investment.

Let’s examine the facts: arguably the best-known distillery, Laphroaig, is owned by the US company Beam Inc; Ardbeg is owned by the French company Moet Hennessy, while Lagavulin and Caol Ila are both owned by those Sassenachs at Diageo; Bunnahabhain is run by Burn Stewart, which in turn is owned by the Trinidadian company Angostura, and Bowmore is owned by the Japanese giant Suntory. So, just what is so awful about Bruichladdich falling into the Remy Cointreau portfolio?

To my mind, it’s something of a miracle that Bruichladdich has survived at all, since it was mothballed by Whyte & Mackay in 1994. It was six years later that the distillery was purchased for just over $10.1m by a group of investors led by Mark Reynier, of independent bottlers Murray McDavid. The drive to revitalise the brand and distillery was further enhanced by the presence of Jim McEwan who, from the age of 15, had worked at Bowmore (man and boy) and is himself an Ileach.

With his production know-how, McEwan was able to take the distillery back to its roots and produce whiskies that were not commercially possible at the other distilleries on the island, like the recently- launched Islay Barley Series of malts, the Donlossit. These manifestations garnered much talk and publicity, spearheaded – some would say ruthlessly but most would agree single-mindedly - by Reynier, who along the way delighted in controversy.

It’s no easy task to get a single brand to market these days, so this type of notoriety was a must to keep Bruichladdich top-of-mind. And, because it was painted as an independent up against the big boys, everyone who mattered took up the Bruichladdich cause: That could well explain the current wailing and gnashing of teeth, as folk had taken the ‘laddie to their hearts.

In the 12 years of its ‘fierce independence’ Bruichladdich has notched up annual sales of GBP8.7m giving it an estimated 0.3% share of the global single malt market – and that's something all at the distillery can be justifiably proud of. Oh, and there’s even a gin distilled there too, The Botanist, which is “crafted from 22 wild native Islay botanicals” – but of course – and referred to as Islay Dry Gin - again, but of course!

Call me cynical - and maybe I am - but methinks this is milking the Islay connection a tad too much. It’s definitely time for Remy.

The company is offering US$52.8m that is over five times the acquisition price, which all makes for a fairy-tale ending. The group of investors would be mad to not take the money and head for the sunset, while Bruichladdich’s own future is secured in the more-than-capable hands of the French group.

I suspect there will be some rationalisation along the way (the Botanist for one), but all in all it’s an excellent result for team Bruichladdich.

Perhaps one of Remy’s first moves will be to sign the brand up to the Scotch Whisky Association, as that would be the right and proper thing to do, but that’s another story, or can of worms.

Sectors: Mergers & acquisitions, Spirits

Companies: Remy, Cointreau, Beam Inc, Diageo, Suntory, Whyte & Mackay, Scotch Whisky Association

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