Burn Stewart profits double after refocus on branded whiskies

Published on Monday 13 October 2008 21:53

DISTILLER Burn Stewart has doubled its profits after refocusing on its core products and ditching own-label deals with supermarkets.

The maker of Scottish Leader, Deanston, Black Bottle and Bunnahabain said profit doubled in 2007 to 400,000, marking the second year in the black after a nine-year stretch of losses.

But the firm warned that it did not expect significant growth in the current year as a result of the global economic squeeze – although it added that its lack of exposure to mature markets in Europe and the US would protect it from too big a hit.

Scotch has long proved resilient to economic problems, with the Scotch Whisky Association revealing last month that exports were up 14 per cent to more than 1.3 billion in the first half of 2008. The industry as a whole has invested more than 500 million in the past 18 months.

Burn Stewart's latest set of accounts, newly filed with Companies House, revealed that turnover had dropped 16 per cent to 45.4m, but was ahead of management expectations.

Burn Stewart said the drop came amid a change in strategy for the company as well as tough trading conditions.

The East Kilbride-based company, which was bought out five years ago by Trinidadian conglomerate CL Financial in a 50m deal, previously had a number of deals with supermarkets, but has cancelled some of the contracts to concentrate on production of its branded products.

It continues to produce about 1.6 million cases of whisky a year.

Finance director Sara Bishop told The Scotsman: "We are still in the turnaround process but things are definitely moving in the right direction. It may seem small increments in terms of the bottom line, but it is significant for us."

She added: "We have kept the contract with Marks & Spencer, but have withdrawn from contracts with other retailers.

"The volume of cases we make has remained the same, but we have shifted our focus – own label was just not the way we wanted to go any more."

Burn Stewart's major markets are overseas, with most of its growth coming from Africa – chiefly South Africa – and Asia. Its best performing brand is Scottish Leader, which achieved double-digit percentage sales growth in 2007. Bishop added: "We are very small in the local market but are growing in Africa and Asia where wealth is growing and luxury goods, especially single malts, are becoming more popular."

The firm ramped up its staff in the latest full year to 253 from 239 the year before. The highest paid director, assumed to be managing director Fraser Thornton, received 177,000 – up from 157,000 in 2006.