Spirits of the age
THE spirit industry has a new major player with the creation of MaxxiuM, the global sales and distribution company formed by Highland Distillers, Remy-Cointreau and Jim Beam Brands (JBB).
The new firm, the second-largest drinks distributor in the UK, brings brands such as Grouse, the Macallan, Highland Park, Jim Beam, Finlandia, Cointreau, After Shock, Jagermeister and Remy Martin Cognac under one roof - a pretty powerful premium portfolio.
This further consolidation of the industry was inevitable; the only surprising thing is how long it has taken firms to band together to combat the stranglehold that UDV, the spirits arm of Diageo, is slowly putting on sales and distribution of spirits.
MaxxiuM's birth was overshadowed by frantic speculation about a takeover bid for Highland. After every firm had been fingered as a possible bidder, the smart money is now on Edrington Group, a private family trust that already has a 29% stake in Highland and, with Highland, owns blending house Robertson & Baxter.
The Edrington scenario would explain why Highland seemed less than concerned when the takeover news broke - and why MaxxiuM has gone ahead. If Edrington is behind the takeover, Highland would be taken off the stock market - a good move in many people's eyes - and make the chances of a further, hostile, bid unlikely.
This is just the first of many shifts in the spirits industry. The fact that no one has yet tackled Diageo/UDV has allowed that giant to freeze its competitors out of many international markets - a worrying long-term scenario, especially at a time when the whisky industry is cutting back on production. If whole markets disappear, what hope is there for distilleries to reopen?
Despite the industry agreeing that someone needs to take Diageo on, the firms thought most likely to hop into bed with each other, Allied and Seagram, appear to have had a tiff - partly because of Allied's protracted sale of its pub estate and partly because it won't comply with Seagram's stated position that, if a merger was to take place, Seagram would be the dominant partner. This indecision can only benefit MaxxiuM.
It's a nervy time for smaller firms. Pernod, Bacardi and Brown-Forman are all eyeing up vulnerable rivals. Glenmorangie, Burn Stewart and even the privately owned William Grant are all seen as targets for takeovers or mergers while Whyte & Mackay, though JBB-owned, may be seen as surplus to requirements now that MaxxiuM is up and running.
What does all this mean to the trade? On the plus side, now you can get most of your premium spirits from two suppliers - it will be interesting to see who picks up the accounts in the ex-Allied-owned pub estate. The downside of this is a possible reduction in choice at the very time when the market is showing some signs of life. There are interesting times ahead. n
by Dave Broom
