Edrington, the international ultra-premium spirits company, has reported encouraging financial results for the year ending 31 March 2021. While the results show a material decline in revenue and profit, these reflect a better-than-expected performance in an operating environment that included Brexit, US tariffs and the effects of the global pandemic.
- Core revenue (from Edrington branded products at constant currency) of £576.2m, -15% from 2020
- Core contribution of £196.5m, -19%
- Brand investment of £118.9m, -8% vs prior year growth, representing 21% of core revenue (2020: 19% of core revenue)
- Profit before tax of £178.4m, -21%
- Net debt of £375.5m, an improvement of £76.3m vs prior year
- Edrington’s leading brand, The Macallan saw a significant decline in contribution driven by a sharp contraction in global travel retail, closures of bars and restaurants and wholesaler destocking in the USA. However, consumer demand for the world’s most valuable Single Malt Scotch Whisky remained strong and the business pivoted to accelerate progress in new channels such as e-commerce. The brand saw strong performances in China, South-East Asia and Russia.
- It was a challenging year for our other single malts, Highland Park and The Glenrothes, reflecting a competitive category, loss of sales in travel retail and the impact of tariffs in the USA.
- Naked Malt relaunched in new packaging to appeal to existing and new consumers in the increasingly important contemporary whisky category.
- The Famous Grouse proved resilient in its core markets in northern and eastern Europe and extended its lead as Scotland and the UK’s favourite whisky.
- Brugal, Edrington’s premium rum, generated outstanding growth in its home market of the Dominican Republic, where the company was able to maintain supply and visibility for consumers.
Commenting on the results, Scott McCroskie, Chief Executive, said:
“In last year’s annual report, I anticipated a decline in profitability after several years of consistent growth, as a result of the Coronavirus pandemic and tariffs on Single Malt Scotch Whisky in the USA, our largest market. Our reported results confirm that this was indeed the case, although I believe that the relatively modest declines represent a good outcome in the circumstances.
“The reduction in net sales reflects pandemic-related restrictions as well as trade destocking primarily in the USA. Our decision to maintain relatively high levels of brand investment meant that core contribution reduced by more than net sales, although that was mitigated by a range of cost reduction measures. Our free cash flow and net debt both improved as a result of these measures, and I am pleased that the company remained well within its lending limits and banking covenant tests.
“I am proud of the way our people have responded to the pandemic, and of the results we have achieved. The fundamentals of our business are strong, and our brands are in good health. Although the pandemic will continue to impact our business for some time to come, I am encouraged by the growth in sales we have seen in the first quarter of this financial year. I am confident we can navigate the challenges we face and that we are ready to progress from a position of strength.”
Edrington is also pleased to announce that it has agreed to take a significant minority stake in No. 3 London Dry Gin, the ultra-premium gin owned by Berry Bros. & Rudd, a family-owned and private business. Edrington has had a long and successful partnership with BB&R, dating back nearly 100 years.
The agreement, which is expected to conclude imminently, will see No. 3 distributed across Edrington-owned distribution markets including the USA, APAC, Global Travel Retail and the Nordics. Berry Bros. & Rudd will continue to distribute in markets including the UK, Germany, Italy, Spain, Australia, and Belgium. The companies are not disclosing the financial terms of the agreement.
Mr McCroskie added: “I am really pleased that Edrington will enter into a strategic partnership with our long-term partners Berry Bros. & Rudd on the No. 3 London Dry Gin brand. No. 3 complements the existing Edrington portfolio of exceptional ultra-premium spirits adding an award-winning and beautifully elegant, classic London Dry Gin to our line-up of Single Malt Scotch Whisky, Rum, American Whiskey, Blended Scotch Whisky, and Tequila.
* Figures stated before exceptional items
Edrington’s vision is to give more by crafting exceptional ultra-premium spirit brands. The Macallan is our central focus, supported by Highland Park and The Glenrothes in the fast-growing single malt category and Naked Malt in the blended malt category. Our portfolio is completed with The Famous Grouse Blended Scotch Whisky and Brugal premium rum from the Dominican Republic. Edrington also has strategic partnerships with Tequila Partida, Noble Oak and Wyoming Whiskey in the Tequila and American Whiskey categories.
Edrington is headquartered in Scotland and employs over 3,500 people in its wholly-owned and joint venture companies, with over 70% employed overseas. We own our route to market in 15 countries and distribute our brands to more than 100 countries around the world through joint ventures and third-party agreements.
Edrington’s principal shareholder is The Robertson Trust, which has donated £301 million to charitable causes in Scotland since 1961. Our business is underpinned by the Edrington values of giving, respect, integrity and excellence.