UK: Whyte & Mackay chief bullish as own-label prices rise
Whyte & Mackay managing director Bob Brannan has spoken of his confidence in the company's future after revealing that retail prices of private-label Scotch were rising for the first time in 15 years.
Brannan told just-drinks today (31 July) that the retail price of own-label Scotch - after stripping out VAT and duty - had leapt 15% at the UK's big four supermarkets in the last three months.
The increase has provided a boost to distillers like Whyte & Mackay, where private-label Scotch accounts for half of the company's volumes.
Brannan said that growing sales of the company's branded whiskies, including Whyte & Mackay and Isle of Jura, means that it needs to take a "very disciplined approach" on prices of own-label Scotch.
He said: "The prices on private-label were uneconomic for suppliers. We're not expecting to make the margin we make on brands but we need to get a reasonable return on capital."
UK off-trade sales of the Whyte & Mackay brand, meanwhile, have risen by 10% in the last six months, outperforming a declining category
Brannan said: "Demand for our brands has grown quite significantly so we need to reserve stock for our brands - there is no point in letting go so cheaply."
The rise of own-label prices, combined with the rising demand for aged Scotch and the growth of emerging markets in Asia and Latin America, were behind Whyte & Mackay's decision to keep its Invergordon Distillers business. Whyte & Mackay had received several offers for the business, which mainly produces own-label Scotch, after putting the business up for sale last year.
Brannan said: "We had pretty attractive offers but as the process progressed, we started to take a much more positive view of the market - and I'm sure other companies would share that positive view."
However, the growing popularity of Scotch internationally, particularly in markets like China, has led the major whisky producers to realise that they may face a shortage in stocks, Brannan said.
"All of the big brand-owners are doing very well but they've recognised that they're not in a strong enough stock position and are scrambling trying to find stocks.
"We have got a strong stock profile relative to our brand sales but we've got to start switching stocks out of bulk and private label and into our brands, given our growth projections for our brands."
He added that Whyte & Mackay wanted to see a "major turnaround" from its position where own-label whisky accounted for the majority of the company's volumes. Brannan said the company was looking to double the sales of its branded Scotch whiskies over the next "four to five years" and would focus on growing sales in Latin America, Asia and Eastern Europe.
In the last year, Whyte & Mackay has repackaged and relaunched its key brands, which also include Vladivar vodka. Brannan said the company was starting to roll out the new-look brands in international markets.
The company is also set to appoint a regional director for its business in Eastern Europe and strike a distribution deal in China for its flagship Whyte & Mackay brand by the end of the year, Brannan added.
Whyte & Mackay also announced its accounts for the year to 30 September 2005 today. The company posted a 28% leap in operating profit to GBP11.1m (US$20.7m) on the corresponding period a year earlier. Turnover was up 4% to GBP149m.
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