Covert operations

Covert operations

Dave Broom decides it's high time for Inver House Distillers to spill the beans

Production | 16 Jun 2002 | Issue 23 | By Dave Broom

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When you think of whisky distilling, Airdrie doesn’t spring to mind.Situated in the industrial belt that runs between between Glasgow and Edinburgh it’s a tough, working class town which has struggled ever since Scotland’s industrial base was decimated. Ships are no longer built on the Clyde, the mines have closed, the steelworks been turned into a theme park. This isn’t the Scotland promoted by VisitScotland, a romantic country of castles and glens, heather and kilts. This is a Scotland of housing schemes, Irn-Bru, struggling football teams, unemployment and community. The one thing that links these two sides of modern Caledonia is the only manufacturing industry left in the country: whisky. Maybe Airdrie isn’t that strange a location after all. There was a distillery here once. In fact, there were two on the one site: one making grain, the other malt, but who remembers Moffat grain, or Glen Flagler or Killyloch malts these days? Just another victim of the recession in the ’80s when central Scotland had its working heart ripped out. The two plants were built in 1964 by Inver House Distillers, which was then owned by the American firm Publicker, a Philadelphia-based company eager to grab a slice of the then-booming Scotch market. At one point it was claimed to be Scotland’s largest on-site distilling, bottling and warehousing plant. By the ’80s however, the company was struggling, the distilleries were demolished and the Americans were only too happy to cut their losses and accept a management buy-out. What the directors got was a shell of a firm with no plants and hardly any brands. Bit by bit they have rebuilt it, but done so in such a quiet manner that if they hadn’t bought Pulteney, Balblair and Balmenach so soon after one another we might not have noticed what was going on. You know what? They’d have preferred it that way.“There was a bit of press then,” says Jacqui Stacey, the company’s Marketing Director, almost as if there was something wrong with that, “but then it settled down.” You could imagine the sighs of relief that the pesky press had forgotten about them again, allowing Inver House to get on with their jobs. They are the quiet ones of the industry. It struck me at that point that Jacqui and I had been talking on and off for 10 years, but had never met. We’d had this polite relationship, but one where her replies to the questions were always slightly guarded. They were a firm you had to winkle information out of rather than them coming to you with the news. Most firms when they buy a new distillery – especially a classic like Balmenach or Pulteney – would initiate a massive media hoo-ha. Look at Bruichladdich. Inver House has preferred to operate like a whisky stealth bomber, creeping under the media’s radar.“It’s never been our way to make a big fuss,” says Jacqui. She seems slightly bemused as to why I’ve asked to come to see her. Why would anyone want to know about Inver House? Well, I say, because you’ve managed to rebuild the firm, you’ve got a clutch of idiosyncratic distilleries and blends. You’re a small firm doing rather well in a market dominated by huge
players. I’m interested.When the MBO was completed the new team set about buying brands. Luckily this was the time of the Guinness/IDV merger so they snapped up the Catto’s and Hankey Bannister blends from IDV and the then-silent Knockdhu distillery from Guinness-owned DCL. After starting production at this charming, if remote, Speyside plant they snapped up Speyburn, Rothes’ forgotten distillery. In ’95 it was the silent, mighty Balmenach and that isolated maverick Pulteney. Balblair, the forgotten distillery of the north-east coast was bought the year after. That’s a pretty handy collection which seems right for a firm like Inver House. Stylistically Balblair, Speyburn and Knockdhu (aka An Cnoc) are quiet, balanced, unshowy malts while the firm has kept the robust Balmenach under wraps as a single bottling – so far. Only Pulteney stands there and draws attention to itself. All the plants are hidden away in overlooked corners of Scotland. It’s all rather appropriate.There are other similarities. All the plants were of a type. This was a time when there were plenty of distilleries for sale. The firm could have had their pick from any number of large modern plants which would have given them the volume they needed for fillings. Instead they picked up a clutch of small, ultra-traditional plants. Importantly they restored them rather than rip out the old and replace it with computerised systems. “We could have stuck in stainless steel washbacks, lauters rather than cast iron mash tuns, got rid of the worm tubs and gone automated,” says Jacqui. “It’s a marketing tool. One of our strengths is that our distilleries are traditional.” I tell her of how, when it was owned by Bell’s, Speyburn was considered a punishment distillery, a forgotten outpost where you were sent if you had blotted your
copybook. She seems genuinely alarmed.Stylistically they reveal an unflashy, quiet, traditional Scotch distiller. I remember as a new journalist arriving at the tail-end of the old-style way of doing business. There would be lunch in the boardroom or one of Glasgow’s grander restaurants. You’d be royally entertained, given copious amounts to drink and meet with the top people. Only when you returned home, slightly befuddled did you realise that you hadn’t actually got a story. It was an industry where secrets were never revealed, a sociable, clubbable society which kept itself to itself. Very Scottish, that. Pulteney signalled a change of approach for Inver House. It fitted their criteria in being out of the way and traditional, but it made a big and bold malt. Pulteney swaggers along the Wick seafront, gives you a great bear hug. It’s a boisterous, idiosyncratic dram from the most wonderfully bizarre distillery I’ve ever been to. It has personality and heritage galore. To its credit, Inver House realised what former owner Allied had (once again) failed to cash in on. The brand was totally repackaged, there was a newsletter, followed by a website, and now a visitor centre attraction.Pulteney didn’t just put Inver House on the map, it also put Wick back on the map. Since then the firm has launched where corporate clients and distributors can choose their own cask and bottle it. Rather than being an ‘investment’ site it’s a way for people to buy from Inver House’s existing stock. The customer can specify distillery, age, cask type, strength, whether to chillfilter or not. At the moment it’s the only way to get hold of Balmenach. Just one way in which a small firm can be proactive in an increasingly tough market. “There are opportunities, especially in malt,” says Jacqui, “but it’s sad to see the industry killing the margins on malt. It’s ridiculous that our workers can buy a rival malt whisky in the Co-op for less than we can sell ours for in the staff shop.” She sees things getting tougher before they get better. “As the larger firms focus on major brands they strip the price on others. If you have a well-known brand and slash the price then consumers will buy it. We’re in real danger of seeing the market flooded with cheap whisky. It’s not easy for anyone, especially a smaller firm. Distillers seem to have forgotten that it’s not volume that matters, it’s margin.” But could things be about to change? We were meeting not long after Inver House had been bought: Jim Beam finally pulled out of Scotch and Kyndal was formed, leaving that new firm in much the same position as Inver House was in 1988. Despite it yet again being in foreign hands, Jacqui seems relaxed about it all. “It was a happy story. The employees were all shareholders and had been paying the dividends back into the firm. They got their money just before Christmas, their jobs are secure, the outlook for the firm is healthy and we’re able to move into a new market. It opens up whole new opportunities for us.” So more acquisitions in the offing, Jacqui? “Probably. I wouldn’t rule it out as long as there is a strategic fit.” The mind whirrs: Scapa? Glen Scotia? Brands and distilleries from the post-Seagram fall-out? She is saying nothing … on that at least. But Jacqui, are you going to talk to me more? “We’re being more proactive,” she smiles. “Yes, for sure.”
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