The Scottish Financial News reported on July 2 that Edrington, the owner of the iconic scotch whisky brand The Macallan, admitted to a revenue decline of £274.4 million ($370M) leaving the company with a total revenue of £912,000,000 ($1,232,399,280.00.) The drop marks a 26% decline in pre-tax profits, and a loss of 10% in core revenue.
“After several years of unprecedented growth for premium spirits and industry-leading results posted by Edrington, the business felt the full effect of the global economic downturn during the year,” said Edrington CEO Scott McCroskie in a statement, according to the Scottish Financial News. “Our focus on ultra-premium spirits has driven Edrington’s growth in recent years and we have continued to execute our strategy despite the hostile trading environment. This includes further strategic investments in our sherry cask supply chain and in reducing our carbon footprint.”
At the beginning of July, Edrington finalized the sale of The Famous Grouse and Naked Malt Brands to focus on premium products. McCroskie expressed that the future “remains volatile,” and growth might be challenging, but the brand’s strategies and cutting overhead costs might “align net sales and core contribution,” within the following year.
The Macallan parent company joins the ranks of Constellation as far as suppliers aiming to shift focus to premiumization. Constellations sold off Meomi in April to focus more on “higher-end wine” and “craft spirits.” The supplier cited a shift in consumer preferences as the main driver. The mega supplier agreed to hold onto its $15 and above wine brands like Kim Crawford and Robert Mondavi.
This strategy appears to have some ground in current market trends. Just Drinks reported in February that craft spirits appeal to Millennial and Gen Z consumers. Though they may be short on cash and focused on wellness, both generations seem to prefer to drink higher-end spirits. Yet this paradox does pose its challenges.
“The main challenge in today’s spirits market is to navigate the trend towards premiumisation while managing rising costs,” General Director of Imports and Exports at the beverage distributor Varma Group in a statement. “Consumers are looking for innovative and high-quality products, but economic pressures are also a reality.”
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