Luxury goods market lifts corporate spirits
THE biggest whisky operator in Scotland, Diageo, remains confident of future returns from high range spirits, at it raked in a multi-billion profit for the second half of 2014.
Diageo reported a PS1.7bn profit, a 18% drop on its previous figures. The company owns Johnnie Walker, Buchanan’s, Bell’s, Black & White, Talisker, Lagavulin, Glen Ord, Dalwhinnie, Cragganmore, Haig, Glen Elgin as well as other whisky brands and distilleries.
Diageo Europe president John Kennedy said: “Sales are up 10% in the last six months, and if you look at the long term trends we do think there are four to five hundred million people who will go into what we call the higher net worth category, where these kind of brands become accessible.”
“Therefore, it’s a great short term result and we think it will continue for the long term.”
Diageo previously sold Whyte & MaKay, after an investigation by the Office of Fair Trading raised concerns of the dominance of the firm in the whisky market.
The company is one of several multinational companies that profit from the Scotch whisky industry.
Professor John Kay, visiting professor of economics at the London School of Economics and fellow of St John’s College Oxford, estimates that only PS400m of the PS25bn global retail sales value of Scotch whisky (only two per cent) remains in Scotland.
Graeme Blackett’s of Biggar Economics proposed a ‘production tax’ to ensure that proceeds from public resources in Scotland earn revenue for public services.
Previously Ivan Menezes, Diageo chief executive said whisky representatives had “been very pro-active” in lobbying for the sector during the independence referendum.
Image courtesy of John Haslam.