Unions and politicians in scramble to protect workers
Scotland’s whisky industry has suffered a devastating blow, with one of its leading players announcing plans to axe up to 900 jobs.
Diageo – the world’s largest spirits firm and the name behind iconic whisky brand Johnnie Walker – said yesterday it was closing its Kilmarnock packaging plant, with around 700 posts going between now and the end of 2011. The group is consolidating packaging operations at sites in Glasgow and Fife.
It is also closing its Port Dundas grain whisky distillery in Glasgow, with the loss of up to 140 jobs.
Changes to working practices at Diageo’s packaging plant at Shieldhall, in Glasgow, are expected to see a further 30 positions going, while around 200 Scottish workers are being re-deployed as the firm looks to cut costs in the recession.
The firm said there would be no compulsory redundancies at impacted sites for 12 months.
Diageo Scotland managing director Bryan Donaghey said the restructuring would help secure the sustainability of business in Scotland.
He added: “85% of our output from Scotland is exported to over 180 markets worldwide. We need to be competitive in a global context and the restructuring announced is a key part of this. We will do everything we can to support our employees through this difficult time.”
Unions and politicians voiced shock at the job cuts, which will be partially offset by the creation of 400 posts at the packaging plant in Fife.
Grahame Smith, general secretary of the Scottish TUC, said the announcement had come as a total shock to the workforce, adding: “The impact on the Kilmarnock area is potentially devastating.”
The Scottish Government described the move as “extremely disappointing” and said First Minister Alex Salmond would meet senior bosses at Diageo today.
Finance Secretary John Swinney added: “The government is asking the company to reconsider this course of action and to look at alternatives which protect employment.”
Kilmarnock’s plant is in the constituency of former defence and Scottish secretary Des Browne, who said he was devastated that the town’s historic link with Johnnie Walker was ending.
Port Dundas falls within the Glasgow North East constituency, where a by-election is looming after the recent resignation of Commons speaker Michael Martin.
Diageo’s whiskies also include Benmore, Haig, Spey Royal, Vat 69 and White Horse plus a host of single and classic malt brands.
Other drinks in the group’s portfolio include Baileys liqueur, Captain Morgan rum, Guinness stout and Smirnoff vodka.
Scotland is one of Diageo’s largest spirit supply centres, employing around 4,500 people and producing nearly 50million cases of Scotch whisky and white spirits.
The firm hopes to save an extra £40million a year from the changes in Scotland.
Rum deal helps whisky group to strong sales and profit growth
Edrington sees premium spirit markets holding up despite effects of global downturn
Whisky distiller Edrington Group has reported strong growth in sales and profits for the year to March 31, with its acquisition of a 61% stake in Dominican rum producer Brugal accounting for a substantial part of the growth.
Chief executive Ian Curle said yesterday the growth was despite a softening of demand in some of Edrington’s main markets because of the global economic slowdown.
He said: “While this will affect our growth ambitions in the short to medium term, we remain confident about our long-term prospects.”
Mr Curle said the trading environment changed significantly over the second six months of the year as the effects of the downturn affected both consumers and trade in many key markets.
He added: “During this period we have experienced trade destocking in a number of markets as wholesalers and retailers seek to reduce their working capital and debtor exposure.
“Consumers are also changing consumption patterns with a clear shift to the off-premise as they become more value conscious. While this makes for a tough trading environment, we remain confident about the prospects for premium spirit brands, and in particular our portfolio of premium Scotch whiskies and rum.”
The privately owned group noted a strong performance from its core whisky brands, which include The Macallan and Highland Park single malts and The Famous Grouse blend – now the number one blend in the UK after having been the top choice in Scotland for 29 years.
Edrington said Brugal golden rum had added a new and exciting dimension to its portfolio as the leading spirit brand in the Dominican Republic with a market share of more than 80%, and showing good growth in Spain despite a significant slowdown in the Spanish economy.
Glasgow-based Edrington has reported group turnover up 44% on the year before at £419.9million and pre-tax profits excluding exceptional items up 30.5% to £94.8million. The figures include Brugal’s trading results for the first time.
Edrington’s annual accounts for the year show that its unnamed highest-paid director, thought to be Mr Curle, received emoluments, benefits and performance-related payments amounting to £677,000, compared with £839,000 the year before, when his performance-related payments were almost £300,000 higher.
Forsyths reckons previous year will be hard to beat
Rothes firm’s bosses predict a more modest performance
Rothes-based Forsyths has entered its latest trading year with lower expectations after an “excellent” 2007-08, accounts from the engineering firm show.
Forsyths, a coppersmithing and steel-fabrication business serving the distilling and oil industries, saw pre-tax profits soar nearly 70% to £3.98million in the 12 months to October 31.
Gross profits jumped to £6.44million in the latest period, compared with £4.94million in 2006-07.
In a report with the accounts, released by Companies House, yesterday the directors said: “The performance for the year has been excellent.”
The firm said 2008-09 growth was likely to be more modest, adding: “The current economic climate has inevitably introduced an element of uncertainty to the forecasting of future trading prospects.
“The directors do not anticipate that the increases in profitability seen in recent years will continue until there is a reversal in the current world economic cycle.”
Forsyths’ two main markets – whisky and energy – had already peaked after several buoyant years, chairman and managing director Richard Forsyth said yesterday. He added: “It will be a surprise if we can match last year’s performance. The whisky market is still relatively buoyant but oil and gas business has levelled off.”
Forsyths’ accounts also reveal a large payout for a director who retired last July.
The MD’s elder brother, William Forsyth, earned £2.15million from the sale to the firm of 88,481 shares: nearly half of the company.
The firm – part of Forsyths Group – gave its top earning director a salary and pension package worth £374,887 last year, against £223,194 for the best-paid boss in 2006-07.
The subsidiary employed 153 people, on average, during the latest period, up from 134 the previous year.
Forsyths Group, which also includes Forblast, Grants (Dufftown), G and A Construction and McCormacks, has shed about 5% of jobs from a total workforce of nearly 300 in recent months in response to the anticipated slowdown.
Drinks giant Diageo has announced it is to cut up to 900 jobs in Scotland.
The posts will go under a restructuring that will see the closure of its Port Dundas distillery in Glasgow and a packaging plant in Kilmarnock.
The company, which has its headquarters in Edinburgh, said the closures would take place over the next two years.
Diageo said the job losses would be offset by the creation of about 400 new jobs through the expansion of a packaging plant at Leven in Fife.
The firm said about 700 jobs would go over the next two years with the closure of the Kilmarnock packaging plant in East Ayrshire.
Diageo said the plant faced "infrastructure limitations" which were not issues at its other packaging plants at Shieldhall in Glasgow and Leven in Fife.
DIAGEO JOBS
# 700 lost at Kilmarnock packaging plant
# 140 lost at Port Dundas Distillery and Dundashill cooperage
# 30 lost at Shieldhall packaging plant
# 400 jobs created at Leven packaging plant
# 80 office jobs at Dundas House transferred
# 40 staff transferred from Carsebridge to Cambus sites
# 64 warehouse jobs at Hurlford transferred out
# 36 remaining Hurlford jobs relocated
# 16 jobs in Speyside transferred out
The closure of Port Dundas Distillery in Glasgow and the neighbouring Dundashill cooperage will result in the loss of up to 140 jobs.
Diageo said work from Port Dundas could be met through the continued expansion of the Cameronbridge Distillery in Fife.
A further 30 jobs will also be cut at the Shieldhall packaging plant in Glasgow.
Although it is taking on work from the closure-threatened Kilmarnock packaging plant, Diageo said a £3m investment in the site and changes in working practices would allow for a reduced workforce.
The firm stressed that the net job losses would be about 500 posts in Scotland as the headline figure would be offset by jobs created elsewhere.
It aims to create up to 400 new jobs at the Leven packaging plant in Fife.
An £86m investment will see the construction of a new packaging hall to open in mid-2011.
Diageo said it hoped some of these jobs would be taken by employees transferring from Kilmarnock.
The restructuring plans will see about 80 office-based staff at Dundas House in Glasgow transfer to another location in central Scotland over the next two years.
“ I am sorry for the impact this announcement will have on our employees and their families in Kilmarnock and Glasgow and the difficulty this will cause in Kilmarnock, where we are a major employer ” Bryan Donaghey Diageo Scotland managing director.
Elsewhere, the company is planning a new £9m cooperage to be built at its existing Cambus site near Alloa by summer 2011.
This will result in the closure of Diageo's nearby Carsebridge cooperage.
The company envisages relocating 40 staff from Carsebridge to Cambus, together with some roles relocating from Dundashill Cooperage.
Diageo also plans to contract out operations currently undertaken at the Hurlford consolidation warehouse in Ayrshire and exit the site next year.
About 64 despatch warehouse jobs at Hurlford will be transferred under TUPE regulations to third party logistics company, Malcolm Group.
The 36 remaining Diageo jobs at Hurlford would be relocated to other sites.
The firm also said haulage of distillery "co-products" would be contracted out to a third party transport company, McPherson Ltd.
The 16 associated jobs in Speyside will be transferred under TUPE regulations.
Bryan Donaghey, managing director of Diageo Scotland, said: "These decisions have been extremely difficult to take. We have only reached them after an exhaustive review of all the possible alternatives.
"I am sorry for the impact this announcement will have on our employees and their families in Kilmarnock and Glasgow and the difficulty this will cause in Kilmarnock, where we are a major employer.
"We believe the plans announced today will help secure the sustainability of our business in Scotland.
"We will do everything we can to support our employees through this difficult time.
"We will also work closely with local political and community leaders in Kilmarnock so that together we can seek to address the impact this announcement will have on the town."
Labelling tradition
Kilmarnock and Loudoun Labour MP Des Browne said the closure of the packaging plant would have a "devastating" impact on the local economy.
"Every bottle of Johnnie Walker has a label which says that this whisky has been bottled in Kilmarnock since 1820," he said.
"The town of Kilmarnock and the people of Ayrshire have contributed to this business's profits for nearly two centuries.
"The company now needs to work with their staff in Kilmarnock and revise these proposals as they did 10 years ago to maintain this presence and these jobs. That's what I'll be working for from today."
Mr Browne added that he had called for a meeting with Diageo management.
A spokesman for the Scotch Whisky Association said: "We've no doubt these will have been difficult decisions to take.
"The Scotch whisky industry is working hard to invest to secure its sustainability and competitiveness, which is so important to the Scottish economy.
"We continue to believe whisky has a strong long-term future, as shown by Diageo's own commitment to investing in new and expanded facilities in Scotland."
Last month Diageo, whose brands include Guinness, Smirnoff Vodka and Johnnie Walker whisky, said that markets around the world had weakened.
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It reported that sales were down 7% in the three months to the end of March.
Predicting cereals demand would be impossible, it is claimed
A plea for farmers to be given a better indication of forward demand for malting barley from distillers was rejected yesterday.
NFU Scotland cereals committee convener John Picken had called for more market information to be shared between distillers, their maltsters and the farmers who grow the malting barley and wheat that are key to the production of Scotch whisky.
He said this would help take some of the volatility out of the market and allow farmers to plan cropping as well as respond to the challenges of increasing production costs and dramatic swings in the costs of fuel and fertiliser.
He told a NFU Scotland whisky seminar at the show: “We need long termism back into industry. We need to know requirements for the years ahead.”
But Gavin Hewitt, of the Scotch Whisky Association, said it would be impossible for distillers to respond to Mr Picken’s challenge as it was “notoriously difficult” to predict annual cereals demand.
“We do not have a crystal ball,” he said. “I cannot give you the certainty that you desire. We have a growing dialogue between ourselves and I hope we can build on that because I want to give you the confidence that we have a future together.”
Mr Hewitt said the last year had been difficult for distillers because of the global economic downturn and the problems this had caused in some markets.
He was, however, optimistic about the long-term outlook for Scotland’s national drink, exports of which last year hit a record £3.1billion. He saw future opportunities in China and India as well as Brazil, Turkey and Vietnam.
Mr Hewitt used the seminar to renew the SWA’s longstanding plea for reductions in import tariffs, particularly in India where duties remain at around 150%.
Reducing that to zero could lead to soaring sales and catapult India to one of the top five markets for Scotch globally. The expectation was for an extra 6.5million cases of Scotch being sold, a figure that would equate to a 7% increase in production and 7% rise in cereal demand.
Mr Hewitt also expressed concerns about the Scottish Government’s proposals for minimum alcohol pricing, saying the plan needed to be urgently reviewed.
Mr Hewitt acknowledged the biggest challenge facing the whisky sector was ensuring that every part of the supply chain, including farmers, received “good value from it”.
New Fife distiller turns tradition upside down ...
by going to Tasmania to recruit a whisky expert
Tasmanian brings his expertise to Kingsbarns
IT IS the equivalent of selling sand to the Saudis or ice to the Inuit: a proposed Scottish distillery has gone to the bottom of the world for advice in making whisky.
The Kingsbarns Company of Distillers, based just outside St Andrews, Fife, has enlisted Bill Lark, founder and owner of the Lark Distillery in Tasmania and known as the "Godfather of modern Australian whisky-making", to help it cash in on the booming whisky tourism industry.
The plan is to convert a semi-derelict farmstead on the Cambo Estate between St Andrews and Crail and open it as a small-batch distillery, visitor centre and restaurant. The estate has been home to the Erskine family since 1688 and adjoins Kingsbarns Golf Links - where the dream of a new distillery was forged.
A second Australian, golf course and whisky entrepreneur Greg Ramsay, 32, is also involved, along with Abertay University graduate Doug Clement, also 32, who first met Ramsay while caddying at the Kingsbarns course.
The distillery project, which will cost between £1 million and £1.5m, will be launched tomorrow in the hope that funding will come from investors keen to get involved at groundfloor level with a new distillery where the rewards can be great. More than one million tourists visited distilleries last year and brought in more than £25m in revenue. And the number of whisky tourists was up 12% on the previous year, despite the recession.
Wearing a Royal Stuart tartan tie and sitting in the Royal & Ancient Golf Club in St Andrews yesterday, Lark told the Sunday Herald he had been "really nervous" about the prospect of "coming here to teach Scots how to suck eggs". But Lark has an impressive pedigree. For 20 years he has been making whisky in Tasmania and this year his Cask LD 100 won the Best Other Single Malt Whisky at the 2009 World Whiskies Award, organised by Whisky Magazine. That is, the best in the world outside Scotland and Ireland.
Lark explained that he and Ramsay knew one another because of the latter's own Tasmanian business interests, including setting up the Nant distillery and building a golf course.
He said: "The Scotch industry tends to think it is a big business and that distilleries have to be big. We think small can be better and can really involve people who are excited about hand-crafted whisky.
"Doug and Greg believe the Kingdom of Fife is sadly lacking distilleries. While they were caddying here they knew people came to Kingsbarns or St Andrews for golf, but there was nothing very much else for them if they were also interested in whisky.
"I had tremendous support from the Scotch whisky industry when I was setting up the Lark Distillery and they have been very excited about us coming here to help with this distillery, so that made it easy for me to come across."
In another coals-to-Newcastle moment, the stills will be made in Tasmania by a boilermaker who has previously worked with Lark and has constructed 14 stills for the Australian whisky industry.
Kingsbarns will have a pair of stills: an 1800-litre wash still and a 600-litre spirit still. Barley will be grown in Fife and hand-turned in the distillery's own floor malting.
Lark added: "The distillery will be tourism-driven, of that there's no doubt, but it is vitally important that we are making top quality whisky. We want to get people involved in every aspect of whisky making and play a role in producing whisky."
Preliminary plans are with the council and the company is looking at beginning to produce spirit by early 2011. Lark said: "We will be looking at small cask ageing with quarter casks holding 1000 litres, which means the whiskies will mature more quickly - within five to six years."
To ensure a cashflow before the spirit can be sold as whisky - three years is the minimum - the distillery will also be making gin, a botanicals-based liqueur, and speciality spirits that don't need such a long maturation period.
The head of the Cambo Estate, Sir Peter Erskine, said: "It will be a fun and glorious adventure and will bring jobs to Scots people."
A Swede has the biggest collection of BenRiach malt whisky in the world. Magnus Fagerstrom (44) from Helsingborg in the south of the country started collecting BenRiach two years ago and now has 201 different bottles plus miniatures and toy trucks with the BenRiach logo on the side! Here, Magnus explains how his interest in BenRiach has grown over the years, how he has painstakingly put his collection together, the generosity of other fans, the detective work required to make the collection complete and, in Magnus’s opinion, the best BenRiach ever.
“Back in May 2004, I started to keep a record of which whiskies I tasted and over the next five years I evaluated almost 2800 different types. I then started to think about collecting full bottles but first I had to establish three important criteria.
“Number one is, of course, that it has to be a very good whisky. A friend of mine, Anders Melin, had given me some BenRiach, so that was the first criterion met. BenRiach it would be!
“Secondly, it had to be possible to get a complete collection. Before Billy Walker and his colleagues took over BenRiach, there was only one distillery bottling made, so that criterion was also met.
“In addition, I had to track down all the expressions and as I started collecting three years after the first new releases came, I had to investigate which ones had been issued and how to get hold of them. Two people gave me excellent help - Belgian collector Bert Bruyneel and Alistair Walker at BenRiach. The two most important criteria were therefore met.
“Thirdly, it had to be affordable and I thought it was.
“The final thing that convinced me I should collect BenRiach is that it was re-started in 1965 after 65 years of silence. I was born in 1965 so I thought that coincidence was an extra fun thing! Unfortunately, there were no casks from 1965 still in stock when Billy took over and I doubt whether there ever were any 1965 bottled as I haven’t heard of any.
“In collecting BenRiach, I’ve had excellent help from many friends around the world. I’ve been in contact with wonderful people in Taiwan, Japan, South Africa and all over Europe to get hold of different bottles for my collection. After a lot of research, there were just four bottles missing from the collection.
“I tried to buy them from Bert but initially he declined my offer. But then all of a sudden he said I could buy his whole collection of 80 bottles. His price was reasonable so I got a loan from my bank to fund the purchase. So now I have all the official bottlings ever made in my collection...as far as I know anyway!
“You might ask: why does a Swede get so excited about BenRiach? The answer is I like the fact that BenRiach has both peated and unpeated whisky. I also like the packaging and all the stuff that BenRiach does. And after I visited the distillery a few weeks ago I am even more excited. I had a great time with Stewart Buchanan that day.
“I’m often asked what is the oldest BenRiach I have. Age-wise, the oldest one is the BenRiach 40 year old but if we are talking about when it was bottled I have a BenRiach 1969 that was bottled in 1981.
“And the most I have ever paid for a bottle of BenRiach is £740 which I paid for the 40-year-old.
“Taste-wise, my favourite BenRiach bottling is the 1976, cask 3557, bottled for La Maison du Whisky in France. It is a fantastic dram. Very close behind is the 1976, cask 8079, bottled exclusively for the famous Craigellachie Hotel in Speyside. 1968 and 1976 seem to have been fantastic years for BenRiach.
“Another favourite is the 1980, cask 2535, Virgin Oak at 55%. It’s a very special whisky that has spent 26 years in a virgin cask. Actually, that is something that shouldn’t work but with BenRiach these virgin casks are excellent. There are some 1994 virgin casks released that are very good too.
“Collection-wise, my favourite bottlings are some of the special ones, like the “Cape Of Storms” bottles bottled for South Africa. A very special bottle is the 1994, cask 3244. It was bottled for Whisk-e in Japan and I have two different ones. One is made for Isetan (168 bottles) with the text “Exclusively for Isetan” on the label and the other doesn’t have that wording. Bottling dates are one month apart and there are only 60 bottles made without the Isetan text on the label.
“The fact is I have not tasted all of the BenRiachs in my collection, as some are just too valuable to open. I have not been able to afford to buy doubles of all of them, but I try to buy an extra bottle so I can taste them. I still have quite a few doubles that I haven’t opened yet, but there are a few bottles for which I don’t have doubles. I hope the distillery will provide me with samples of new bottlings so I can try them without having to buy double bottles. For independent bottlings, I only buy one of each as it is the distillery bottlings that are number one in my collection.
“I currently have 201different bottles of BenRiach: 45 are non-vintage distillery bottlings, 84 are single cask distillery bottlings and 72 are independent bottlings. I have ordered another 1 distillery bottling and 1 independent bottle but they haven’t arrived yet. I also have 9 miniatures and 12 toy trucks with BenRiach advertisements on the sides!
“I have some great stories about my collection. For example, I knew there was a 12-year-old called “Cape of Storms” exclusively bottled for South Africa. I had no idea how to get hold of one but a friend put me in touch with someone who had one. Unfortunately, after a lot of negotiations the guy backed out. I started to search the Internet and found a 16-year-old on WhiskyLive’s website in Cape Town. They forwarded my email to the importer in South Africa and he wrote back to say he had a special gift pack with both the 12 and 16-year-old! I emailed back, sent him a link to my webpage with my BenRiach collection, and the next day I got a very nice email. He had shown my collection to the two South African partners in BenRiach, Geoff Bell and Wayne Keiswetter, and they also liked what they saw. As it was close to my birthday, they sent me the two bottles as a gift! When the bottles arrived I had to pay Swedish tax, but I did that happily. And when I opened the box, inside was a “Happy Birthday” card signed by both Wayne and Geoff! I treasure that card almost as much as the “Cape of Storms” bottles!
“Another wonderful story relates to the time I picked up the bottles I bought from Bert Bruyneel. He kindly arranged a tasting which we finished with a 1976 bottled for the Craigellachie Hotel and then another 1976 for La Maison du Whisky. He told me to buy as many 1976 LMdWs as possible but at 195 euros I had only bought one; after tasting it I cursed myself for not having bought more. There was of course one in the collection I bought so I do have one extra for drinking. I tried to convince Bert to sell me another one as he had some unopened, but he refused. He said I was more than welcome to come and visit him and help him drink it but, as he put it: “This is the best BenRiach ever and I want it to last for the rest of my life”, so I totally understand that he holds on tightly to the ones he has!
“Everyone is different when it comes to how they drink BenRiach but personally I first taste everything neat. When evaluating, I always add a few drops of water to see what it does for the whisky. When I drink for pure pleasure I prefer it neat or sometimes with some water. Some whiskies are best neat even when they are very high in alcohol and others need some water to open them up a bit. But ice is an absolute no-no when it comes to my BenRiach!
“I’m often asked to sum up the unique appeal of BenRiach. I would say: “classic fruity Speyside with a peaty twist.
“I’m not a great fan of food with whisky as I prefer to have my whisky by itself. At tastings I use dark chocolate and crackers to cleanse the palate and sometimes coffee when it’s a big tasting, but I haven’t yet found any food with which I would like to drink whisky. A cigar once in a while with a nice whisky is good too.
“I have tasted BenRiach in many places but the best place was in Warehouse 13 at the distillery in the splendid company of BenRiach’s Distillery Manager Stewart Buchanan. Tasting BenRiach directly from the cask is unbeatable and I can’t wait for that 1970 sherry cask to be bottled!
“Probably the most memorable place I’ve tasted it was when I held my big BenRiach tasting with 32 guests, including Alan McConnochie from BenRiach / GlenDronach, and 21 different BenRiach single casks here in Helsingborg. Along one of the walls we set up shelves and on them was my whole BenRiach collection plus miniatures and toy trucks with the BenRiach logos. No-one else can set up a surrounding like that!
Here’s a full list of all the whiskies we tasted and the tasting order.
