Highland Spring strengthens grip on top spot

Rory McIlroy, centre, celebrates Ryder Cup success for Europe with captain Paul McGinley, right. Picture: Getty

However, the Perthshire firm – which was the official water supplier for last month’s Ryder Cup golf tournament at Gleneagles – saw its annual profits fall by more than a quarter as an increase in distribution costs offset healthy growth in revenues.

Last year’s summer heatwave helped sales at the group, which is owned by billionaire Mahdi al-Tajir, rise 13 per cent to £97.7m in the year to the end of December, accounts filed at Companies House show.

“The group has focused on consolidating its position as the UK’s leading bottled water supplier and benefited, along with the rest of the market, from the favourable conditions seen in the UK during the summer of 2013,” said Highland Spring.

Sales of its eponymous brand in the UK grew to 230.6 million litres during the year, compared with 199.3 million in 2012.

Market conditions were described as being “the most buoyant to have been experienced in some years”, with market research data showing the Highland Spring brand grew 15.7 per cent, ahead of the wider market’s 11.6 per cent expansion.

Highland Spring overtook French rival Evian to become the UK’s best-selling bottled water brand in 2012, and now commands 11 per cent of the market, according to industry consultant Zenith International.

However, profit before tax at the group, which was founded in 1979, fell to £2.2m, down from almost £3m in 2012. Earnings were hit by higher administrative expenses and a 10 per cent jump in distribution costs to £31.1m. The firm noted the sector has not escaped fierce competition in the grocery market as retailers battle for customers.

Writing in its annual report, the firm’s directors said: “The marketplace for bottled water in 2013 mirrored that of many food and drink markets in the UK, characterised by aggressive price promotional strategies across the trade and especially in the multiple grocer and cash and carry channels, as these customers sought to improve their respective performances.”  The company employs 420 people, spread across four locations in Scotland and a site in Wales, where it produces flavoured water under the Hydr8 brand.

Its portfolio also includes Speyside Glenlivet, which counts Michelin-starred chefs Tom Kitchin, Michel Roux jnr and Martin Wishart among its fans.

According to its annual report, the firm’s highest-paid director received a total pay package of £314,000 last year, up from £302,000 in 2012.

Highland Spring is headed by Les Montgomery, who joined in 1985 and went on to become finance director in 1993, before being appointed as chief executive six years ago.

“The directors are confident of continued success, both of the core brand and developing product portfolio, including private-label business in unflavoured and flavoured waters,” the Blackford-based group said.

“The site in the Brecon Beacons demonstrated improved utilisation of assets and the growth in sales turnover at this site resulted in a strong performance in 2013 and considerably improved financial expectations in 2014.”