LOCH Lomond Distillers has lifted turnover by 13 per cent to £61.3 million in a year that spanned several months of the pandemic, declaring that its eponymous single malt has become one of the top five fastest-growing whiskies of its type in the world.
But the company, which owns the Glen Scotia Distillery in Campbeltown, High Commissioner blended Scotch and Glen’s vodka, warned that Brexit and the pandemic “have continued to create operational and logistical obstacles”.
In accounts newly filed at Companies House, private equity-backed Loch Lomond reported a “significant increase in take-home purchases” during lockdown, which drove demand for its brands in the domestic market in the year ended September 30. The trend has continued since year-end.
And the distiller said it has seen a similar pattern in international markets, where it is “well positioned in the off-premise channels.”
Sales of Loch Lomond’s single malts exceeded 100,000 nine-litre cases for a 12-month period for the first time in May of this year.
The company’s sales bias towards the off-trade has meant it has been less affected by closures in the hospitality industry because of Covid, but duty-free sales have been halted for a significant periods due to restrictions on international travel. Sales are beginning to pick up in some domestic airports.
Loch Lomond sells its brands in more than 125 markets.
The company welcomed the recent easing of US tariffs on single malt as a “very positive step” for the business across the Atlantic.
A five-year suspension of the tariffs, introduced by the Trump administration in October 2019 as part of a trade dispute between the US and European Union over aircraft subsidies, has been agreed by the governments in London and Washington.
Loch Lomond was acquired by Hillhouse Capital Management, a Chinese investment company, two years ago. Hillhouse purchased the majority of the shares in a deal which increased the minority holding of chief executive Colin Matthews. Mr Matthews had five years previously led a management buy-in with private equity group Exponent to acquire Loch Lomond from the Bulloch family.
Mr Matthews, a former managing director of Imperial Tobacco, said: “With Covid-19 restrictions hopefully beginning to ease around the world, alongside the lifting of the penalising US import tariffs, I am confident that the Loch Lomond Distillers business is in a strong position and will continue to grow strongly going forward.
“We have continually re-invested in our brands, added more strength and experience to our team, even during the pandemic, and as a consequence we expect to see further acceleration in our growth this year and beyond.”
The company’s latest accounts show that pre-tax losses were cut to £1.2m from £17.1m the year before. Although rising sales helped reduce the loss, the financial statements continue to reflect the structure of the company’s acquisition in 2014. That saw the cost of acquiring stock produced before February 28 that year recorded at market value, rather than its cost of production.
Loch Lomond added that its 2018/19 accounts included a number of one-off costs related to the Hillhouse deal that were not repeated last year.
The new accounts show the company held £108.8m of bulk whisky and finished good stocks on September 30. This was £4.9m lower than the year before, which Loch Lomond said reflects the temporary suspension of production at the peak of the pandemic.
Asked how Brexit was affecting sales, chief financial officer Chris Mitchell said: “Logistically it’s simply more complicated to do business in Europe now than it used to be and while we have had to gear up to become an exporter into Europe so have our customers had to become importers of our products. But we are getting through this.”
The accounts show the company employed 240 people at September 30, up from 221.
Loch Lomond operates a malt and a grain distillery at Alexandria, and has its own bottling plant at Catrine, Ayrshire. Its Loch Lomond brand is a major sponsor of The Open golf championship.
Mr Matthews said: “Posting double-digit growth in a year which saw the emergence of the Covid-19 pandemic and lockdowns on a global scale was a remarkable achievement that was testament to two things – the commitment of our people and the strength of our brands – and I’m proud of both. We’ve worked very hard to keep our people and our customers safe, and our belief in our brands has never wavered as we continued to focus sharply on producing some remarkable spirits in difficult times.”