Glenmorangie makes case for higher margins

Malt whisky maker Glenmorangie's new strategy of focusing on higher- margin cased sales rather than bulk turnover to the whisky blenders appeared to pay off in the six months to September with group sales rising 26 per cent and operating profits bounding ahead by almost a third.

Shares in the company, which used to be known as Macdonald Martin Distilleries, jumped 55p to 815p on the news.

Geoffrey Maddrell, chairman, said: "These results confirm that the company is on course. We are achieving our strategy aimed at growth and improved quality of earnings and are meeting our planned financial targets whilst effecting major changes."

The fortunes of Scotch whisky distiller Glenmorangie have been transformed since Mr Maddrell, former boss of textiles group Tootal, was installed as chairman in 1994. He shifted the group's strategy to heavy investment in marketing premium brands, including the Glenmorangie and Glen Moray single malts.

Single malts have been the fastest-growing part of an otherwise stagnant whisky market in recent years. According to the Scotch Whisky Association single malts grew by 5 per cent in the year to July. Against that growth, Glenmorangie increased sales of cased malt by 30 per cent.

The US market continued to act as the motor of growth with the core brand growing by 36 per cent in America. In the UK, sales in the off-trade were 15 per cent higher. That made up for slower-than-expected sales in India where demand for bottled-in-India Scotch is growing more slowly than anticipated.

Asia is growing in importance as a market for Scotch and Glenmorangie's Highland Queen brand is big in India. In China a joint venture has been established to produce whisky and local spirits.

Sales in the period grew 26 per cent to pounds 22.8m with cased sales within that total increasing by 69 per cent. Operating profit increased by 32 per cent to pounds 5.42m while after a rise in interest payable, pre-tax profits were 7 per cent higher at pounds 4.3m.

While maintaining some traditions, such as its insistence on maturing its whisky in Ozark Mountain north-facing white oaks, Glenmorangie has taken the axe to outdated bottling and packaging facilities and invested heavily in modern production facilities on a new 32-acre site. Mr Maddrell said he was confident of a buoyant Christmas.