July 9, 2008
LVMH Uncorks GBP45m Investment for Glenmorangie
By MARK SMITH DEPUTY BUSINESS EDITOR
LUXURY goods giant Louis Vuitton Moet Hennessy yesterday announced a GBP45m investment plan that will see its premium whisky Glenmorangie relocate its headquarters to Edinburgh and a major revamp at the Highland distillery where the brand is made.
The move is part of Glenmorangie's strategy to withdraw from the bottling and sale of blended Scotch whisky and to focus solely on the fastgrowing international market in single malts.
Under the new strategy, the company's Glen Moray distillery at Elgin, whose whisky is predominantly used in its blended Scotch, will also be sold as a going concern.
Paul Neep, Glenmorangie's chief executive, yesterday told The Herald: "The Glen Moray distillery has literally just been put on the market, so we're not in negotiation with anyone yet.
"But we do expect a lot of interest."
The company said it had already struck a deal with Diageo for the sale of its current 33-acre bottling plant and headquarters in Broxburn and that the relocation to the new site would likely occur in two years.
Asked about funding, Neep said: "The GBP45m investment is being raised internally, by ourselves. We are a very successful company."
He also said that of the GBP45m, some GBP15m was earmarked for the new bottling plant in the Lothians, another GBP20m would be spent upgrading the Ardbeg distillery on Islay and building new whisky cask warehouses at the Glenmorangie distillery in Tain, and a further GBP10m would be spent to increase the distilling capacity and restyle the visitor centre at Tain.
Asked if there would be any job cuts as a result of the investment and subsequent upgrades, Neep said: "Quite the opposite. Actually, we will probably be adding people, but it's far too early to say how many.
"But we value our employees and we expect the vast majority of people to transfer to the new facilities. The workers at Glen Moray will all transfer to the new owner when that happens."
Nonetheless, in a statement, Glenmorangie said: "The company intends to consult fully on the plans to effect the transition of its business and will commence a consultation with staff and trade union representatives.
"It is anticipated that a number of jobs may be affected. Details of any changes required will become clearer during this consultation process."
Glen Moray employs 17 workers at the operation in Elgin.
Neep added: "This is all about focusing on the single malt market, where we are seeing significant growth.
"There are few countries in the world where single malt sales are not growing. There is still a lot of growth in established markets such as the US and the UK, but the major growth is taking place in Asia and the emerging markets, such as Russia and eastern Europe.
"Our plan is to be in these places first so we can take advantage."
The value of shipments increased by 14per cent to a record GBP2.8bn last year.
The SWA also reported that export volume surged to a historic high in 2007, growing by 8per cent with the equivalent of 1.135 billion bottles shipped overseas. Exports of bottled malt whisky climbed by 11per cent, with a value of GBP454m.
The trade body also said trends for the current year remained positive and both mature and emerging markets were performing well, particularly exports to China, India, eastern Europe and Central and South America, where there is a fast-growing middle class.
LVMH bought Glen morangie, which had been one of Scotland's last major independent distillers, from owner the Macdonald family in October 2004 for GBP300m.
It also emerged last year that Glenmorangie was to be revamped and repackaged in an effort to portray itself overseas as a luxury brand, in keeping with the rest of LVMH's product portfolio.
Originally published by Newsquest Media Group.
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