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The news that Rémy Cointreau is looking to move into single malt Scotch or that it is doing with the acquisition of Bruichladdich Distillery is in line with Euromonitor International’s analysis and recommendations made in February 2011.
Source: Euromonitor International
Moving into single malt Scotch makes good strategic sense for Rémy Cointreau. The premium positioning and image of single malt fit perfectly with the French company’s focus on higher-end spirits. More importantly, single malt fits perfectly with its key Rémy Martin cognac brand. Both categories have strong appeal among Asian consumers, with many of their key growth markets being the same.
The fact that the company is expected to acquire the privately-owned Bruichladdich distillery is of limited surprise due to the highly consolidated nature of the category, with many distilleries in the hands of big multinational companies, thus leaving few options. It was only a case of which of the smaller private companies would be willing to sell.
The acquisition, if completed, will be relatively minor and have little impact on Rémy Cointreau’s balance sheet or global rankings. In 2011, Bruichladdich ranked 17th in global single malt Scotch with just a 0.2% volume share, according to Euromonitor International.
There is, however, plenty of room to expand production, with the Bruichladdich distillery currently working at around half its maximum production capacity of 1.5 million litres of pure alcohol, according to the Malt Whisky Yearbook 2012. In addition, planning permission has already been gained by Bruichladdich to rebuild the nearby Port Charlotte Distillery.
Even when the acquisition is completed and the extra capacity built at Port Charlotte, Rémy Cointreau will have to do more to become a major player in the category. The easiest thing to do would be to further increase capacity at the Bruichladdich distillery, but it could also consider making a further acquisition of either Beam’s Scotch assets when it is likely to be broken up or one of the other smaller independent distillers, such as Benriach or J & G Grant.
Regardless of whether this acquisition goes through, the move is further evidence of the company’s determination to remain independent and makes any chance of it being acquired by a major rival unlikely over the short to medium term.