Will Lyons talks with Ian Curle

Will Lyons recently had a chance to sit down with Ian Curle, Chief Executive of The Edrington Group.

Edrington produces such well-known favorites as Highland Park, Macallan & The Famous Grouse. They recently acquired a large stake in Brugal - a little known Rum from The Dominican Republic.

I had a chance to visit Brugal in 2003, and it became my favorite Rum on the spot. Unfortunately it's not easy to get here in the US... but it's worth finding. With the backing of Edrington, it could give Bacardi a run for it's money - it's delicious, priced well, and head and shoulders in taste and quality over the ubiquitous Bacardi line.

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Interview: Ian Curle: It was a rum thing to learn Spanish
by William Lyons
Read Will Lyons online: www.scotsman.com/wine

FOR the past three years Ian Curle has been keeping a secret close to his chest. Once a month, sometimes more often, he would board the British Airways lunchtime flight to Miami. To the outside world the chief executive of Edrington, one of Scotland's largest whisky makers, was doing nothing more than paying a routine visit to a key market.

The reality was somewhat different. After arriving in the Florida sunshine Curle would board a second flight to Santo Domingo, in the Dominican Republic, where he would meet his finance director Richard Hunter and his company secretary Martin Cooke, who flew in via New York. The purpose of these clandestine visits was made clear last Wednesday when Curle announced that he had spent GBP 200m acquiring a majority stake of just over 60 per cent in Brugal, the largest rum brand in the Caribbean. Such was the secrecy surrounding the talks that nobody was aware that Hunter and Cooke had both learned Spanish in order to conduct the negotiations.

"We had to keep it very quiet," says Curle, fresh off a flight from Madrid where he has been in discussions with his distribution company Maxxium to build the brand across Europe.

"This is the second largest corporate deal in the history of the Dominican Republic. Over there Brugal has 93 per cent of the domestic market and is very much considered a national asset. We had to retain top secrecy at all times. It was too important."

The deal is the second largest in Edrington's history following its GBP 601m buyout of Highland Distillers in 1999. Brugal will now sit alongside Edrington's other brands: The Famous Grouse, Cutty Sark, The Macallan and Highland Park, transforming the Perthshire based distiller into a five-brand business and pushing the company's valuation towards GBP 1bn.

"I haven't actually done the sums," says Curle. "Because we are a private company there is actually no official value on us so I couldn't give you an exact number. But it's not something that preoccupies us, which is an advantage. For us it is the quality of the products and growing the business that is the priority."

Naturally reserved, his softly spoken and cautious approach is reflected in the way he does business. Curle joined Edrington from accountancy firm Arthur Andersen in 1986 and worked his way up to the top position via the operation's route. Within the company he and former chief executive Ian Good are widely credited with its transformation from a mainly domestic whisky firm into an international branded business.

"A lot of people look at our business and see it as Famous Grouse in the UK," he says. "But in reality that is the tip of the iceberg. In the last five years the Edrington group has become much more international. We have opened an office in Shanghai; we now have people in New Delhi, a team across the States, a presence in the Caribbean and soon we will be opening an office in Spain. As a result of the Brugal deal only about 10 per cent of our business is now in the UK.

"Our priorities are broadly spread across the globe. Take Grouse, which has been Scotland's best selling whisky for the last 27 years - more than 50 per cent is now sold overseas. In fact I think the figure is probably nearer 60 per cent, which is a huge change from 10 years ago."

Curle has been eyeing up an acquisition since he took the helm in 2004. Alongside whisky, spirits are a fast-growing category. Analysts say it is not surprising he has focused on rum. Vodka, although growing,
already has a number of big entrenched brands such as Smirnoff, Absolut and now Diageo's Ketel One. The story is similar with gin and analysts point to Edrington's brief foray into the sector with Gloags that wasn't  exactly a runaway success. Rum seemed the obvious choice.

"Rum is one of the most exciting sectors within the spirits industry," says Curle. "The data looks very exciting. At the moment it is just creeping into the UK's style bars but with the fullness of time this will grow. As it stands it is already big in the USA, Italy, Germany and Spain, where Brugal is the number two golden rum brand."

Curle has already appointed Mark Geary as Brugal's new international sales and marketing director. Geary, who will be opening a six-man sales office in Madrid in April, is tasked with growing the brand
internationally.

"It will be a phased progress," says Curle. "But over the next six to 12 months we will be rolling out Brugal into a number of key markets including the UK."

Although he is tight-lipped on future acquisitions, saying only that the focus over the next two years is to bed in Brugal and continue growing his other core brands, some analysts have suggested that he may already be eyeing up a move into the brandy sector.

"I couldn't comment," he says. "But do you know what I liked about this acquisition? It's that rum appeals to a slightly younger consumer than a Scotch drinker, the product is a little bit sweeter and it can sometimes be mixed. So it's complementary to our existing portfolio. It doesn't cut across at all what we are doing with Scotch."

Part of the reason Edrington can afford such a large acquisition is down to the success of its Scotch brands, particularly The Macallan.

Since 1999 sales of Macallan have tripled with both volume and value rising. Grouse has just had a very strong Christmas while sales of malts are rising both at home and abroad. But despite the positive outlook,
Curle remains steadfast that prices will have to rise in 2008.

"There is a lot of cost pressure coming through the business," he says. "Cereal prices have gone up, energy prices have gone up and with that commodities like glass and cardboard have risen.

"So there is a real need across the spirits industry for prices to go up to recover our costs and I think now there is a realisation that the supermarkets are beginning to take this on board."

Not that Curle will be losing too much sleep. These days he's more likely to be poring over sales data from Asia than Aberdeen. He says: "Sure, it is important to us what happens in the UK but it is not fundamental."

This story originally appeared in  February 10, 2008 edition of Scotland on Sunday.

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Hey, did I see "Macallan" in that story???

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Comments

[Ian Buxton]

This is a very smart move. Brugal is an excellent product and has great international potential.
Edrington have been shrewd in disposing of assets such as Bunnhabhain, Glengoyne and now Glenglassaugh (when the sale goes through) to smaller players who will give the tender loving care they need, whilst concentrating on Famous Grouse, Highland Park (also growing very fast, and rightly so) and another brand that I'm not going to mention in case Kevin sends me a hat.
(I can't afford the postage. Please give my hat to an impoverished sub-prime banker.)

Remember that many distillers would have mothballed these plants, with consequent loss of community and employment in fragile small local economies, rather than see a competitor make a success of them. 3 cheers for Edrington's more enlightened and socially responsiible view.

Also, not everyone may appreciate what a coup this article is - Edrington are traditionally very secretive. It's amazing to see their CEO giving a press interview.

[hwh]

...smart move by Edrington...had the pleasure of tasting Brugal in the Dominican on a couple of holidays...checked the LCBO website...still about 40 bottles available in Ontario but I see where they've got 2700 bottles on order...so we'll all be able to enjoy some soon...my guess is we'll hear about an Edrington tequila next