Historic Speyside whisky business unveils next move after ‘very unhelpful’ Budget leads to six-figure bill

Gordon & MacPhail, the historic whisky specialist, has committed itself to major investment at its two Speyside distilleries and given a cautiously optimistic outlook for the current year despite a “very unhelpful” Budget that saw the Chancellor hike spirits duties and employers’ national insurance payments.

Recently appointed chief executive Phillip White said the Elgin-headquartered firm was planning investment in the “multiple millions a year” to help support growth at its distilleries, Benromach and The Cairn. The family-owned business, whose roots stretch back almost 130 years, is already investing in its warehousing complex at Benromach to increase maturation capacity. The company also continues to invest in new oak casks for both Benromach and The Cairn, which has been distilling for more than two years now and has a growing reputation as a top visitor attraction.

White said: “We have a lot of stock to lay down. We are also investing in improving our kit, in things like better boilers so that we have a more efficient heat source. The investment amounts to multiple millions a year. Being family owned we can tolerate very long investment programmes.”

Gordon & MacPhail CEO Phillip White outside the Benromach distillery in Forres. Picture: John Paul Photography

The firm was established as an Elgin grocery business in 1895 by James Gordon and John Alexander MacPhail. From that eponymously named store, the business has grown into a multi-faceted retailer, international trade partner, distiller and single malt maturation expert. It opened Benromach in Forres in 1998 while the firm’s second distillery, The Cairn, overlooking the River Spey, near Grantown-on-Spey, was opened in 2022.

White, who took up the top post in April, has considerable leadership experience in the food and drink industry, most recently from his position as managing director of Kent Frozen Foods and Medina Foodservice. He also spent ten years with Bacardi and Brown-Forman. At the end of the financial year, Ewen Mackintosh retired following a 33-year career at Gordon & MacPhail, the last decade of which he spent as managing director.

White was speaking as the group posted its annual results for the year to February 29, which were said to reflect a return to “normalised levels of profit” following an “exceptional” prior 12-month period that benefited from a post-pandemic bounce and, in part, the release of its “Generations 80 Years Old” product - one of the most expensive whiskies in the world.

Speymalt Whisky Distributors, trading as Gordon & MacPhail, reported turnover of £34.4 million for the 2023/24 financial year, down from £46.5m the year before. Pre-tax profits fell sharply, to £4.3m, from £17.4m in 2022/23. It noted that the results reflected robust trading during the first half of the financial year, in line with management expectations, while the second half had been impacted by softer market conditions attributed to wider trading, macroeconomic and geopolitical headwinds facing the Scotch whisky industry.

The Cairn distillery, overlooking the River Spey, near Grantown-on-Spey, was opened in 2022.

In line with its long-term strategic focus on developing its own brands, the business withdrew from the UK wholesale market midway through the financial year and ceased filling new-make spirits into casks at distilleries not owned by the company.

“We took the decision to carefully come out of that market,” noted White. “Wholesale is high turnover but low margin and you really need to scale to make it work. Our long-term future is as a whisky brand owner and we still have decades’ worth of stock.”

At the end of October, Chancellor Rachel Reeves announced a £25 billion raid on employers’ national insurance contributions, with the rate rising by 1.2 percentage points to 15 per cent from next April, and with payments starting when an employee earns £5,000, down from the current £9,100. In her first Budget statement, Reeves also announced a further duty rise on Scotch whisky in a move that the Scotch Whisky Association said would “smack of a betrayal” to many in the industry.

White described the Budget measures as “very unhelpful”, saying the national insurance change would be a “significant six-figure hit” for the business. “It is pretty unhelpful in the current market but we will get our heads down and work hard to mitigate that,” he said.

“All the indications from the UK government were that they were going to back Scotch whisky to the hilt but unfortunately that did not transpire and that is painful. We will have to paddle harder to improve our performance as a result of those headwinds.”

He said he was “neutral to mildly positive” regarding the outcome for the company’s current financial year, which commenced at the start of March. “I am cautiously calm,” he added. “I don’t expect profitability to decline further though we still have quite a few months left of the current year. The previous year saw significant change in the market with interest rates going up and the situation in Ukraine developing and that significantly changed things for everybody in the drinks industry.”

The company will wait until the mid-2030s to release the first single malt to be distilled at The Cairn. In the meantime, a range of blended whiskies has been created under the brand name CRN57 to provide customers the opportunity to gain a “sense of the flavours” that will be found in The Cairn in years to come.

The firm also acknowledged that March had brought the sad news of the death of Ian Urquhart, at the age of 76. He joined the family business in 1967, working his way up to managing director before retiring in 2007.

Urquhart was the driving force behind the company’s decision to purchase Benromach Distillery and is said to have possessed an “encyclopaedic knowledge” of Scotch whisky and the Speyside area.

The UK Budget was full of betrayal for Scotland's whisky industry