United Spirits reportedly considering selling Scottish grain whisky distillery Invergordon after Office of Fair Trade in UK voices concern that distillery violates competition laws
May 29, 2013
(Times of India)
– United Spirits (USL) will consider selling Scottish grain whisky distillery Invergordon, which it acquired as part of the $1.18-billion Whyte & Mackay acquisition six years ago, said people directly familiar with the matter. The Office of Fair Trade in UK, which reviewed the recent Diageo takeover of USL, has flagged concern that the combined grain whisky distillation violates competition laws, they added.
Invergordon Distillers and Cameronbridge, the latter already owned by Diageo, are among the largest grain whisky plants in Scotland. Invergordon has 40-million-litre production, while Cameronbridge is at 140 million litres annually. Diageo also owns a 50% stake in North British Distillery, which has 60-million-litre capacity. Grain whiskies are mostly used to develop scotch whisky blends such as Johnnie Walker and Chivas Regal.
But the UK regulator is unlikely to demand further sale of Whyte & Mackay assets to clear Diageo's $2-billion deal with USL. Recent media reports had speculated that the whole of Whyte & Mackay would be on the block after the Diageo takeover. An emailed questionnaire to Diageo remained unanswered at the time of going to press.
Whyte & Mackay has five distilleries in Scotland, with Invergordon being the only grain whisky producer. Dalmore, Old Fettercairn, Isle of Jura and Tamnavulin are malt distilleries and owners of vaunted single malts.
Drinks industry analysts have argued that Diageo might start divesting Whyte & Mackay brands, which are not strategic to the long-term interests of the world's largest drinks company. Still, Dalmore and Isle of Jura, which are amongst the fastest growing single malts globally, could play a role in Diageo's aggressive emerging markets push.
The two brands have reported robust numbers in travel retail, with Dalmore adding significant numbers in markets like Taiwan. Trade experts said Dalmore, along with rivals Balvenie and Macallan, have seen the highest spike in value growth in single malt charts. Dalmore, for instance, holds the record for being the most expensive bottle of whisky ever sold in retail. The last bottle of Dalmore 62 fetched $200,000 at the Changi Airport retail in 2011, eclipsing its own previous record of 120,000 pounds (over $180,000, at latest exchange rates) at Harrods in London.