GRAHAM Stevenson wishes he had a crystal ball – one that sees a very long way into the future. Unlike other managing directors, who are struggling to work out how the market will look in a year or 18 months' time, he has to look more than a decade ahead.
As managing director of fast-growing Scotch whisky maker Inver House Distillers, the former accountant has to be as much of a long-term fortune teller as he does a businessman.
In the whisky industry, the time-lag between production and sales is
far from instant.
"A great deal of the whisky has to be matured for a long time – in the case of some of our brands, for as long as 12 years," explains Stevenson, whose Airdrie-based firm produces niche brands such as Old Pulteney, Balblair and Speyburn.
So, while distilleries are upping capacity amid soaring demand in emerging markets such as China and Russia, it is not today's popularity of the drink that Stevenson needs to worry about. "We are running at almost full capacity at our distilleries at the moment, but we are also laying down more stocks ourselves in anticipation of greater demand in the future – in ten years' time or so," he says.
And the firm, which operates five distilleries and employs 145 staff, is keen to break into the emerging markets, which industry leader Diageo dubs "BRKM" – Brazil, Russia, India, China and Mexico.
Stevenson says: "It's a cyclical industry and a very fast-growing one. Around two-thirds of the world's population currently don't drink whisky, but they do drink spirits so there are a lot of possibilities to expand.
"Russia, India and China are probably of most interest to us – we have a particular advantage in that we are owned by ThaiBev, which gives us access to some of those regions."
While Inver House, which was bought by International Beverage Holdings (InterBev), the international arm of Thai Beverages, in 2006, does have a presence in around 80 countries, its international sales are currently not of massive value.
However, Stevenson is hedging his bets and crossing his fingers tightly when it comes to the reality of what will happen.
He explains: "If any of these markets go well, it's great news. If two of them take off, we will be short of stock. If three do, we're going to be very short. It's an exciting time."
To be officially recognised as Scotch, whisky has to be aged in Scotland for at least three years, so the earliest Inver House can sell any stock produced now is in 2011. "The only thing we do know for sure is that whatever happens, we'll not get it right," admits Stevenson.
Plans are also afoot for ThaiBev eventually to run its international marketing operations from Scotland.
Stevenson says: "We want to create a world-class international sales and marketing hub for the group here.
"Basically, all of the sales and marketing outside of Thailand would be done here.
"We're not sure when that will happen, but it will be an excellent opportunity for our people when it does."
The firm, which in 2007 reported profits of £3.8 million – 107 per cent higher than the previous year – and turnover of £57.8m, up from £38m in 2006, maintains that things are "extremely positive" in the first half, and predicts it will be ahead of last year's first-half turnover.
However, Stevenson admits that the second half might be "more challenging". Production costs have risen, although Inver House is confident it can pass the rises on to the consumer for now – pushing prices up by 5-10 per cent over the past year.
Malted barley has soared in price – more than doubling since 2006, due to a series of crop failures, an increase in demand for the product and the rise in the use of biofuels.
"Nobody will ever go back to selling whisky as cheaply as they did before, but prices will stop rising as sharply," he predicts. And while he admits that the economy is looking "pretty fragile" at the moment, he isn't too concerned. He says: "Alcohol is probably one of the last things that people cut back on; it is still seen as an affordable luxury."
With that in mind, Stevenson has transformed the company from a "production-led" firm to a "marketing driven" one – more than doubling the marketing spend over the past five years to around £2.5m a year.
It relaunched its Old Pulteney brand a year ago and has also made a slightly unusual push into flagging its blended brands as ideal cocktail mixers, introducing it into trendy city bars such as Edinburgh's The Traverse.
One of Inver House's main focuses over the coming 12 months is the planned relaunch of the bizarrely-named Hankey Bannister, which was, legend has it, one of Winston Churchill's favourite tipples.
But, before leaping in with both feet to slap Churchill's well-recognised face on the label, Stevenson wants to check his sources.
He says: "We're doing our research at the moment into whether this is definitely true. However, there's something about that brand that could really take off, if we can just find the key to marketing it."
While Inver House is not actively on the acquisition trail, Stevenson has his eyes open to possibilities.
He muses: "It would be nice to expand our footprint beyond our core competence, but buying a decent brand … I just can't imagine what would come available."
Time to look into that crystal ball again perhaps?
BACKGROUNDAFTER training as an accountant, Graham Stevenson spent seven years at KPMG before a job advert in the paper caught his eye.
The North British Distillery was looking for an accountant and, being a whisky afficionado, Stevenson decided to apply.
He worked for the company for 17 years, before moving to Inver House Distillers in 1994. The Airdrie-headquartered company was founded in 1964, originally supplying the US market with the Inver House Green Plaid brand of blended Scotch Whisky.
In 1988, it was sold to a management buy-out and then again in 2001 to Pacific Spirits UK, part of the Virgin Islands-based Great Oriole Group, for £58 million.
The full article contains 1049 words and appears in The Scotsman newspaper.
