Columba Cream plan hits the rocks

Published on 03/09/2006 00:07

THE dream to turn Columba Cream, Scotland's answer to Bailey's, into a major international drinks brand was thrown into doubt last night amid speculation of a break-up among the management team that rescued the firm last year.

Former Morrison Bowmore directors Kenny MacKay and Rob Starling led a three-man management buy-in of The Scottish Liqueur Company in February last year. They were joined by Jamie Morrison, formerly with drinks distributor Maxxium, with a plan to bolster sales of the cream liqueur worldwide.

It was hoped that Columba Cream, a mixture of malt whisky, real cream and honey, could carve out a niche market as one of the only significant players in Scotland.

The cream liqueur category in Scotland is almost double the size of the single malt whisky category with case sales reaching two million a year. According to research company Mintel, the UK sector is expected to reach a value of 655m this year. But it predicts that the next five years will see a drop in sales of 7% in real terms and that by 2011, the market will be worth 692m.

But sources close to the company said a difficult financial year had forced a major restructuring resulting in the imminent departure of Starling.

Last night MacKay insisted that Starling was still a director and shareholder of the company. When asked if Starling would be leaving, he replied: "He is still an employee at present."

MacKay added: "We took the business over in February last year and our idea was to rebuild a business that had been struggling. Have we restructured the business? We have rebuilt the factory, we have a completely new operational team and we just continue to look at the business as we go forward.

"Last year we made a substantial loss but we planned to make a substantial loss. You can't turn a business round and move into a category like cream liqueur without spending money, but we do have some confident shareholders who are backing the business.

"The business is actually performing really well. We have just finished our biggest ever month and we are doubling sales in our shop area so the future is rosy.

"It is an exciting market. We are on the verge of launching a couple of new products. One is Ginger Tams, a ginger-based liqueur which at 48% will be the strongest liqueur in Scotland."

Starling was previously head of regional sales at whisky distiller Morrison Bowmore. He took redundancy with Mackay, a former managing director of the brands division at Morrison, in 2004 to become export director at The Scottish Liqueur Centre.

The buy-in deal was backed by former Bowmore chief Brian Morrison. The Bartholomew, Gilchrist and Winterborn families that previously owned the business have stayed as shareholders.

As well as a major relaunch of the Columba Cream brand, the team also injected a substantial investment in an upgrade of the production unit, visitor facility and retail outlet at the company's premises on the A9 at Bankfoot.

Diageo owns Baileys Irish Cream, which had two-thirds of the cream liqueur market in 2005. But its Baileys Glide ready-to-drink product, a lighter mix of Baileys and vanilla, did not perform as well as hoped and was withdrawn last summer.

In 2002, Allied Domecq attempted to challenge Baileys in the cream liqueur sector with Tia Lusso, a lower-fat offering aimed at young women. But Diageo fought back with fierce price cuts on Baileys and Tia Lusso was forced out of the market earlier this year.

In addition to Columba Cream the Scottish Liqueur Company also manufactures a range of four fruit liqueurs including Bruadar, a blend of malt whisky, sloes and honey.

Other companies in the sector include Maxxium with Cointreau, Galliano with its Bols range and First Drinks Brands with Amarula and Disaronno.