The Edrington Group Ltd.

views updated

The Edrington Group Ltd.

2500 Great Western Road
Glasgow, G15 6RW
United Kingdom
Telephone: (44 0141) 940 4000
Fax: (44 0141) 940 4040
Web site: http://www.edringtongroup.com

Private Company
Incorporated: 1961 as the Edrington Group
Employees: 850
Sales: £263.4 million ($516.3 million) (2006)
NAIC: 312140 Distilleries

The Edrington Group Ltd. is one of Scotlands largest companies and one of the worlds leading producers of branded Scotch whiskies. The Glasgow-based companys brand portfolio includes The Famous Grouse, the longrunning best-selling whisky brand in Scotland; The Macallan, ranked among the top three best-selling Scotch brands (behind Glenlivet and Glenfiddich); and Highland Park. Edrington Group has also been the supplier behind the Cutty Sark brand, owned by Berry Bros. & Rudd Ltd., supplying the blended whisky for that brand since 1923.

Since 1998, Edrington has become a joint owner of the brand, taking over its production, bottling, marketing, and distribution. Edrington directly owns and/or operates the Macallan, Highland Park, Tamdhu, Glenturret, and Glenrothes distilleries, for a total production of more than 17 million liters per year. Although the company has focused on its branded whisky operations since the late 1990s, Edrington remains one of Scotlands leading supplier of blended whisky, through its 50 percent share of The North British Grain Whisky Distillery. That distillery produces more than 60 million liters per year.

Edrington Group also has a substantial warehousing capacitya necessity given Scotch labeling requirements that all Scotch must be aged at least three years. Since the 2000s, Edrington has used that capacity to roll out a number of brand extensions, including a single malt version of The Famous Grouse and the high-end The Macallan Fine Oak label. Edrington is also a shareholder in the global distribution company Maxxium, based in the Netherlands, in partnership with Jim Beam Brands, Vin & Spirti, the makers of Absolut vodka, and Frances Remy Cointreau. Maxxium operates in more than 60 countries worldwide.

Edrington Group remains a privately held company, with the Robertson Trust as its sole shareholder. Established in 1961 by members of the founding Robertson family, the trust functions as a charitable organization, using Edringtons profits to fund various charities. Each year, Robertson Trust pays out more than £7 million. Edrington Group itself generates more than £263 million ($516 million) in revenues each year. The company is led by chairman Ian Good and CEO Ian Curle.

SCOTCH WHISKY BEGINNINGS IN 1860

Edrington Group had its origins in the mid-19th century when William A. Robertson established himself as a whisky broker in Glasgow in 1855. By 1860, Robertson had established the Robertson & Baxter partnership; that business quickly established itself as a major hub for much of the Scotch whisky trade, serving as a middleman among the regions many distilleries and its whisky blenders. In 1870, Robertson & Baxter deepened its involvement in the Scotch whisky industry by creating the Clyde Bonding Company. That business became a major bonder, and later bottler, for the trade. As the aging of whisky in casks played an important part in the Scotch production process, Robertson & Baxter expanded its interests again in 1884, establishing the Clyde Cooperage Company. These would remain separate businesses until the creation of the Edrington Group in the 1960s.

In the meantime, Robertson had imposed himself as a true whisky tycoon, joined by son James, who was later credited with becoming the chief architect of the groups growth into the second half of the 20th century. Robertson & Baxter began acquiring direct stakes in whisky production toward the end of the 19th century with the creation of the Islay Distillery Co. in 1879. William Robertson become one of three founding partners of the business, which built its own distillery at Bunnahabhain in 1880. The distillerys production, initially set at a capacity of 200,000 gallons per year, was targeted to the wholesale market as a blending whisky, with Robertson & Baxter acting as the distillerys agent. Full production at the new distillery was reached by 1883, and the company initially enjoyed strong sales.

The depression that struck Scotland in 1886 caused a major setback for Islay Distillery, and in 1887 the company agreed to merge its operations with another prominent name in the distilling community, William Grant & Co., which was then just about to launch what later became the worlds best-selling Scotch whisky, The Glenfiddich. For this, Grant had joined James Stuart & Co., a partnership operating the Macallan distillery in Rothes, in Moray, Scotland, in 1975. That business initially intended to build a second distillery in Rothes. Unable to secure funding, however, the partnership was ended, with James Stuart keeping the Macallan distillery. Grant and the other partners then built a new facility, Glenrothes Distillery, in 1879 and turned to Robertson & Baxter to serve as the new distillerys wholesale agent. In 1884, the distillery was granted the right to extend its name, becoming Glenrothes-Glenlivet Distillery.

Like Islay Distillery, the Glenrothes-Glenlivet was hit hard by the depression. The merger between the two distilleries helped both avoid collapse, and, under the name of Highland Distilleries, they emerged as one of the Scotch whisky industries driving forces. Both William Robertson and William Grant served among the companys original directors, and both companies long supplied directors to the board of Highland Distilleries. Ceding direct control of the Islay Distillery, Robertson & Baxter became the wholesale agent for both distilleries, while also developing its own whisky blending business.

Highland Distilleries expanded in 1892, buying the Glengassaugh Distillery, near Aberdeen. That distillery had been constructed by James Moir, a wine and spirits merchant, together with two of his nephews, Alexander and William Morrison, and a coppersmith, Thomas Wilson. The Glengassaugh Distillery initially produced single malt whisky under its own label. Surplus whisky was assigned to Robertson & Baxter, which supplied another famous Scotch name, William Teacher & Sons. By 1892, most of the original partners in the Glengassaugh Distillery had died. The remaining partner, Alexander Morrison, sold the business to Robertson & Baxter, which then sold the distillery to Highland Distilleries.

COMPANY PERSPECTIVES

We aim to be Scotlands leading international premium spirits company. We own and produce some of the best known Scotch brands in the world and this is supported by a number of specialist operations covering every facet of Scotch whisky, including distilling, blending and bottling.

A fire at the Glenrothes-Glenlivet Distillery in 1897 stimulated Highland Distilleries next expansion. With its stock of whisky destroyed by the fire, the Glenrothes-Glenlivet operation needed a new source of whisky, and in 1898 bought neighboring distillery Tamdhu-Glenlivet. At that time, the Tamdhu-Glenlivet had only just commenced operations, having been built by William Grant in Knockando starting in 1896. Robertson & Baxter were among the new distillerys founding shareholders, a group of fifteen partners brought in by Grant. Production at Tamdhu was launched in 1897, and after only a year had achieved a production of more than 200,000 gallons. By then, Grant had agreed to transfer ownership of the distillery to Highland, which had come under the leadership of James Robertson, who took over as head of both Robertson & Baxter and Highland after his fathers death in 1898. The other founding partners of Highland Distilleries died in 1905.

FROM BLENDED TO BRANDED IN 1970

Highland Distilleries emerged as a major supplier of malt whiskies, as well as a producer of whiskies for blending to Scotlands whisky industry. By the late 1920s, Highland was supplying some 180 customers, with Robertson & Baxter continuing to serve as the companys agent. Highland remained restricted on the supply side of the industry, and focused on building up its distilling operations through World War II. By then, Highland had acquired another distillery business, James Grant & Co., which operated the Highland Park Distillery in Orkney. That distillerys history stretched back to the 18th century, when it was founded by beadleand smugglerMagnus Eunson in 1798. The Highland Park distillery gained a reputation for the high quality of its whisky, operating as a supplier for blended brands.

Among these was the Cutty Sark brand, created by London wine broker Berry Brothers & Rudd (BBR) in 1923. By 1936, BBR had turned to Robertson & Baxter to take over the blending of the Cutty Sark recipe, as well as its bottling, through the Clyde Bonding Company. Cutty Sark was on its way to becoming an immense success, particularly overseas. From the 1950s, the brand had become one of the best-selling Scotch brands in the United States. The Highland Park Distillerys whisky played a major role in defining the Cutty Sark recipe. Because of this, Robertson & Baxter took the opportunity to acquire that distillery after James Grant & Co. slipped into financial difficulties during the Great Depression era.

The relationship between Robertson & Baxter and Highland Distilleries was strengthened in the late 1940s. Following James Robertsons death in 1946, his three unmarried daughtersBabs, Elspeth, and Agnes, took over as companys owners, with Babs serving as head of the business. Then, in 1948, another branch of the Robertson family decided to give up their own stake in the company, selling a major stake in Robertson & Baxter to Highland in 1948. In turn, Robertson & Baxter acquired a small stake in Highland Distilleries.

As a publicly listed company, however, Highland had become vulnerable to a takeover in the mid-1950s. In response, Highland transferred much of its holding in Robertson & Baxter to the latters subsidiary, Clyde Bonding Company. Highland retained a 35 percent stake in Robertson & Baxter. This shareholding transfer was followed by the Robertson sisters determination to provide long-lasting protection for the family-owned distillery, and especially assurance that the company would remain based in Scotland. In 1961, therefore, the sisters transferred all of their holdings in the company to a new entity, the Robertson Trust. This body was then given control over a newly established company, Edrington Holdings Ltd., which took over Robertson & Baxter and Clyde Bonding Company. Highland Distilleries maintained its 35 percent stake in Robertson & Baxter.

The rising popularity of Scotch whisky around the world encouraged Highland to enter the blended whisky market directly. For this, the company acquired Matthew Gloag & Sons Ltd., maker of The Famous Grouse brand. The Perth-based Gloag family had originally been involved in the merchant trade, operating a general merchant shop since the late 1770s. By the 1860s, the Gloag shop had become noted for its wine selection. Shortly before the dawn of the 20th century the company had entered the blended whisky market, under the leadership of Matthew Gloag, who developed a blend which he launched under the Grouse label in 1896.

KEY DATES

1855:
William Robertson establishes business as wholesale whisky agent in Scotland.
1887:
Merger between Robertson-owned Islay Distillery and William Grantowned Glenrothes-Glenlivet Distillery creates Highland Distilleries.
1961:
Robertson family establishes Edrington Holdings as vehicle for its whisky holdings.
1970:
Highland Distilleries enters blended labeled whisky market through acquisition of The Famous Grouse.
1996:
Creation of the Edrington Group, which regroups Robertson-controlled operations as subsidiary.
1999:
Edrington acquires 100 percent control of Highland Distilleries.
2007:
Edrington announces multimillion pound warehouse extension.

From the start, Highland Distilleries had been a primary source for single malts used in the Grouse blend. Before long, the brand had earned a strong reputation, and soon became known as the Famous Grouse. In addition to enjoying rising popularity at home, the Famous Grouse became a strong export label as well, particularly in the United States starting from the 1950s. When a new generation of the Gloag family found itself unable to pay the death taxes associated with the transfer of the estate, the Gloag family turned to Highland Distilleries, which agreed to acquire Matthew Gloag & Sons as its subsidiary.

The acquisition marked Highlands emergence as a branded whisky blender. While Famous Grouse remained a relatively minor brand at the time, selling just 40,000 cases per year, it became the centerpiece of a strategy developed between Highland and Robertson & Baxter to develop an internationally competitive branded Scotch portfolio. The strategy paid offby 1980, The Famous Grouse had become the top-selling Scotch whisky in Scotland, a position it would retain into the next century.

CONSOLIDATING THE GROUP IN 1999

Highland also began developing other brands. In 1979, it launched the Highland Park label for the first time, debuting a 12-year-old Scotch that met with instant international acclaim. Coming full circle, of sorts, the company also acquired the Macallan brand, positioning it at the high end of the whisky sector.

Highland and Robertson & Baxter were meanwhile making moves toward the future Edrington Group. In 1979, the companies strengthened their ties againfollowing a nearly successful hostile takeover attempt by Hiram Walker for Highlandwith Robertson & Baxter building up a 27 percent stake in the distillery group. The cross-shareholding between the two companies was sufficient to hold off further challenges to Highlands independence into the 1990s. Edrington then began restructuring its holdings, reorganizing Robertson & Baxter, the Clyde Bonding Company, and the Clyde Cooperage Company as its directly controlled subsidiaries. In 1997, the company formed a 50-50 joint venture with Berry Brothers & Rudd, called Cutty Sark International, which took over the blending, bottling, and marketing operations of the Cutty Sark brand.

Toward the end of that decade, a drop in Highlands share price, coupled with the rapid consolidation of the global drinks industry, once again threatened Highlands future as an independent, Scottish company. In response, the Edrington Group launched an offerfor some £600 millionto acquire full control of Highland Distilleries in 1999. The purchase helped redirect Edringtons own operations from a focus on the wholesale supply segment to the development of a branded whisky portfolio. In order to gain marketing support, Edrington became one of the founding partners of the Maxxium distribution group. Based in the Netherlands, Maxxiums other founding shareholders were the United States Jim Beam Brands and Frances Remy Cointreau. In 2001, the group was joined by V&S, makers of the Absolut Vodka brand. At the same time, Edrington targeted the China market directly, opening its own office in Shanghai in 2003.

Edrington continued to develop its whisky portfolio into the middle of the first decade of the 2000s, taking advantage of the surge in global demand for Scotch whisky in general and for aged single-malts in particular. The company released the first Famous Grouse-branded single malts, in 12-year-old and 15-year-old variants, in 2005. By then, the company had expanded the Highland Park brand as well, adding an 18-year-old in 1997, a 25-year-old in 1998, a 15-year-old in 2003, and a 16-year-old and 30-year-old in 2005. By 2007, Edrington responded to the surge in demand for its labels by announcing plans to expand its warehousing capacity. Edrington had established itself as a leading guardian of Scottish whisky tradition in the new century.

M. L. Cohen

PRINCIPAL SUBSIDIARIES

Berry Bros. & Rudd; Glenrothes Distillery; Glenturret Distillery; Highland Park Distillery; Maxxium Worldwide BV (Netherlands); North British Distillery; Tamdhu Distillery; The Clyde Cooperage; The Macallan Distillery; The Robertson Trust.

PRINCIPAL COMPETITORS

Diageo plc; Fortune Brands, Inc.; Pernod Ricard S.A.; Irish Distillers Group plc; Allied Distillers Ltd.; Remy Cointreau; Davide Campari-Milano S.p.A.; Mercian Corporation; William Grant and Sons Ltd.

FURTHER READING

Bates, Joe, Polishing a Hidden Gem, Duty Free News International, September 15, 2005, p. 31.

Clark, Ron, An Undependent Spirit, Herald, March 27, 2004, p. 19.

Cuddeford Jones, Morag, Nothing to Grouse About, Brand Strategy, March 2004, p. 24.

The Edrington Group Appoints Non-exec to Board, just-drinks.com, April 10, 2007.

Edrington Group Would Like to Pour China a Drink, China Business News, July 23, 2003.

Edrington Revamps Highland Park, Duty Free News International, October 15, 2006, p. 41.

Edrington Unfazed as French Partner Remy Breaks Away, Aberdeen Press & Journal, November 24, 2006.

The Famous Cruise in Maiden Voyage, Duty Free News International, March 15, 2007, p. 13.

Fraser, Ian, Malt Whisky and Wider Brand Base Tantalizes Macleod, Sunday Herald, May 11, 2003, p. 6.

Reed, Alastair, Ian Curle: Mission to Sell Companys Spirit to the World, Scotsman, December 17, 2005, p. 35.

Rogerson, Paul, Edrington Toasts Continuing Rise in Earnings with a Wee Double, Herald, July 5, 2006, p. 15.

Single Malts Boost Edrington, just-drinks.com, July 4, 2006.

Smith, Mark, Edrington Plans Warehouse Expansion for the Macallan, Herald, March 16, 2007, p. 31.

About this article

The Edrington Group Ltd.

Updated About encyclopedia.com content Print Article Share Article

NEARBY TERMS

The Edrington Group Ltd.