PROFITS at Whyte & Mackay, the Glasgow-based whisky distiller caught in the middle of Diageo’s takeover of United Spirits, have leapt by a quarter as the firm shifts away from making supermarket blends to focus on its higher margin single malts.
The rise in profits, which was revealed in accounts filed at Companies House, could well catch the eye of potential buyers for Whyte & Mackay if Diageo is forced to sell the company when it takes a controlling stake in United Spirits in January.
The Office of Fair Trading (OFT) will not examine the situation with Whyte & Mackay and Diageo – which is already Scotland’s largest distiller with brands including Bell’s, J&B and Johnnie Walker – until after the deal with Indian tycoon Vijay Mallya is completed.
Mallya bought Whyte & Mackay in 2007 for nearly £600 million.
If the OFT raises concerns about Diageo gaining too large a share of the UK whisky market then it could refer the deal to the Competition Commission.
It is understood that the trigger point would come if Diageo was to control more than 25 per cent of the supply of whisky in the UK market. Diageo would then be forced to look at selling either some of its own malt and blended whisky brands or some of those held by Whyte & Mackay, which owns labels including Dalmore and Jura, along with whisky liqueur Glayva.
Industry insiders have speculated that Campari or Bacardi could be potential buyers.
Italian drinks maker Campari already owns the Glen Grant distillery in Rothes and has pulled off a string of deals in recent years to buy Wild Turkey bourbon for $575m (£413m), Skyy vodka for $440m and, most recently, the spirits arm of Jamaican rum maker Lascelles for $415m.
Rum maker Bacardi bought John Dewar & Sons in 1997, taking control of 6 per cent of malt production through distilleries at Aberfeldy, Aultmore, Craigellachie, Macduff and Royal Brackla, near Nairn.
Accounts for Whyte & Mackay showed that turnover jumped by 35.6 per cent to £229.8m in the year 31 March.
Pre-tax profits increased by 24 per cent to £15.4m, even after the firm had spent £3.4m setting up a subsidiary to market its Scotch in the United States.
Marketing in the US had previously been carried out by a third party but taking the work in-house is believed to have given Whyte & Mackay greater flexibility and control in how its whisky is handled.
The accounts mark a sharp contrast with last year’s figures, when profits had dropped by 60 per cent as the firm shifted its focus from “bulk” output – making whiskies for other firms’ blends or as ingredients in other products – to aging its own-label drinks to sell at a higher margin.
Whyte & Mackay – whose other blended whiskies brands include Claymore and John Barr, along with Vladivar vodka – did not return calls for comment.
The company’s other sites include the giant grain distillery at Invergordon, in Easter Ross, and malt distilleries at Fettercairn and Tamnavulin.