Brandy maker Emperador takes shot at whisky to fuel growth

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MANILA, Philippines — Emperador Inc., the liquor conglomerate of billionaire Andrew Tan, is betting on its whisky segment for growth this year despite a market slowdown in the first quarter, as the company plans to spend most of its P6.5-billion capital expenditure (capex) to double distillery capacity.

Emperador CEO Winston Co on Monday said their single malt whisky, through Scotland-based whisky maker Whyte and Mackay, has been “doing very well.”

“When you look at the horizon for the next five years, we are excited for the prospect because we believe that there will be a rebound in consumer spending, particularly on the luxury category,” Co said during Emperador’s annual stockholders meeting.

Co added they wanted to focus on expanding the capacity of their distilleries, particularly for Dalmore, to meet the projected growth in demand. The expansion is set for completion by the second half of the year.

Doubling facility’s footprint

“The company has also started expanding the maturation complex in Invergordon, building more warehouses for whisky aging to house the additional liquid to be produced by the larger Dalmore distillery,” Emperador said in a stock exchange filing on Monday.

The expansion of the Invergordon maturation complex is also expected to double the facility’s footprint to 92 hectares for it to eventually house an additional 1.5 million casks, according to the company.

READ: Emperador expands whisky capacity, eyes China operating venture

Emperador, which used to be a purely brandy-focused firm before it acquired Whyte and Mackay in 2014, booked lower profit in the January to March period due to slower consumer spending.

Its net income fell by a fourth to P1.74 billion, while revenues slipped by 15.8 percent to P13.12 billion during the period.

Last year, the brandy business accounted for 61 percent of Emperador’s P65.5-billion revenue, while the whisky unit contributed 39 percent.

By next year, the conglomerate sees an even split between these two businesses, due mostly to easing inflation and improved consumer spending, Co said.

Focus on ‘premiumization’

In the long-term, Emperador aims to focus on “premiumization,” or emphasizing the premium quality of their products, and internationalization for growth.

“[Emperador] has the necessary ingredients to implement the [premiumization] part of the strategy. Emperador has a sublime portfolio of single malts … and our Fundador brandy is the key catalyst for brandy premiumization,” said Kenneth Nerecina, Emperador investor relations officer.

Last year, the company announced plans to launch a joint venture in China within the decade to capture the country’s growing middle-class market and support global expansion.

Co did not specify the new markets they would penetrate in the near term, saying only they would maintain their current growth strategies. INQ