The just-drinks Interview - Edrington CEO Ian Curle - Part II
just-drinks met with Edrington's CEO, Ian Curle, in New York late last year
In the first part of just-drinks' interview with the CEO of Edrington, Ian Curle set out why his company was bringing its global distribution in-house and investing heavily in its The Macallan Scotch whisky. In part two, Curle talks about his company's unique ownership structure and shares his thoughts on the next possible golden era for Scotch.
Edrington's announcement last year it will spend GBP100m (US$165.2m) on a new distillery for its Macallan Scotch whisky was interesting for two reasons. First, there is the size of the investment, and second that the company making it is not a publicly-traded spirits firm.
Edrington is fiercely proud of its independent status, as it is of the Robertson Trust, the charitable body Edrington donates a share of its annual profits to.
It is this unique set-up that CEO Ian Curle says gave him the freedom him to sign off on the new distillery, despite knowing it will not generate cash for the company from production for another 15 years. And, he claims, he's not sorry to see money that he could invest in the company go to the trust: As he sees it, the trust is his shareholder and the donations equate to dividends.
Ian Curle, CEO of Edrington
“I think our ability to do business has been enhanced by our shareholder structure,” he says. “Yes, we can invest in The Macallan, and set up a new ownership structure (for the company's distribution). It gives us an environment to look longer into the future than our competitors.
“If you look at the markets in Africa or in South East Asia, no one is going in to make a profit today. It's about the long runway to build for the future. So, we can take three-to-five year decisions, but our competitors maybe don't have the luxury of looking that far into the future.”
The brand that Edrington wants to play a bigger part in its future is Brugal. Edrington acquired a majority stake in the rum brand's Dominican Republic-based owner in 2008. Since then, however, a downturn in its core Spanish market led to a write-down that pushed Edrington's last financial full year profits into the red.
Brugal is a brand, Curle says, that needs time taken over it. But, despite the Spanish set-back, early success in the US makes him believe that, if positioned properly, the rum could open all sorts of interesting doors.
“Rum has a bit more fun about it,” Curle says. “It's a bit more interesting. There are a lot of rum consumers and we think there is an opportunity here to lift the profile a little bit.”
He points to Brugal Extra Dry, a white rum that Curle feels doesn't quite sit in one category. “It's targeted at the premium white spirit consumer and it sits in our mind very much in the rum category,” Curle says. “But, as we go to trial with our target audience, we find that it's very easy to have a conversation with those that like premium vodka and gin as well.
“It has a versatility, and it opens up a different demographic than we find with The Macallan.”
One barrier that Curle has no intention to cross, when it comes to Scotch, at least, is the honey divide. He states that The Macallan, or Famous Grouse or Cutty Sark, is not about to release a honey-infused variant in a similar vein to Dewar's, the Bacardi-owned Scotch brand that launched Highlander Honey last year.
That's hardly surprising - after all, Curle is the chairman of the Scotch Whisky Association, which has ruled that any honey-infused Scotch cannot be called a Scottish whisky. It is the reason why Dewar’s Highlander Honey has been marketed as a "speciality" in the US rather than as a Scotch whisky.
“What we see in the US with the Bourbon revival is very interesting, and I think Scotch is looking at how it can play into that, but there are subtitles in the flavour of Scotch that are different.”
But what can Scotch learn from US whiskies' successes with flavours?
“That's what we're all scratching our heads about,” he says. “I think there will be a lot of innovation from many different angles. At Edrington, though, we will approach this not through Scotch but through our rum.”
What the growth of Bourbon has shown Curle is that there is still untapped global demand for brown spirits, with new markets coming onstream.
In Africa, “we're scratching the surface,” he says. “That's a real frontier. But, there are so many nations that are enjoying stability, population growth and positive demographics. For us, it's trying to work our where to invest.”
The possibilities are so manifold that Curle suspects Scotch is entering a unique phase.
“It feels a little bit different,” he says. “There have been cycles in the past, but I think there is a momentum just now.
“Despite the financial crisis in the West, that momentum has not been blunted. It was one of the most dramatic events of a generation and yet Scotch has continued. You can never say never, but it's happening on more frontiers than ever before.
“Some places will take a knock, there will be headwinds. But, that basket of opportunity, it just feels like momentum. I don't know if it'll be 1%, 3% or 5% up year-on-year, but I just sense that there's a momentum there that we haven’t seen before.”
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