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United Distillers & Vintners
Theresia Lüning at United Distillers The biggest corporation behind the Scottish whisky industry is United Distillers. In the branch of the industry United Distillers is simply called UD. In 1997 the biggest spirit distilling company grew even bigger by a merger of Guinness and Grand Metropolitan Hotels (Grand Met, Revenues 1995 12 billion EURO). The company Diageo Plc was born. Before this merger could take place, Guinness and Grand Met had to fight against the resistance of the whole branch and especially against the will of the French luxury products company Louis Vuitton Moet Hennessy LVMH with its chairman Bernard Arnault. Bernard Arnault increased his volume of shares in Grand Met at short term to 11% to have a bigger influence. But he needed 650 Mio EUR to do this. He financed it by reducing his shares in Guinness from 14.2% to 12.5%. The intention of Bernhard Arnault was the split off of the spirit and wine companies from Grand Met and Guinness and to form a marriage of three with his drinks company Moet Hennessy. But in the end he was not successful and left the board of Guinness, to which he belonged as a director since 1989. Grand Met brought with International Distillers & Vintners Ltd. (IDV) also a big distilling company into the marriage of UD and Guinness. From the distilling daughters UD and IDV emerged the company UDV, which is present in more than 200 countries world-wide. UDV sells nearly 1 billion litres of spirits every year. The new mother company Diageo has four big 'Food and Drinks' divisions: UDV, Pillsbury, Guinness and Burger King.
United Distillers Headquarters in Edinburgh To the well known spirit brands of UDV belong: Smirnoff, Number 1 in Vodka
Johnnie Walker Statue at United Distillers In total more than 19 of the 100 best selling spirit brands of the world belong to UDV. The biggest whisky brands are: Bell’s
8 Year Old Classic
Malts and Classic Malts Distillers
Edition Other Whiskys/Bourbon To UDV belong more than 50 single malt distilleries in Scotland. The biggest competitors of UDV are Allied Domecq Plc (Lophroaig, Ballantine’s, Teacher’s, Long John) and The Seagram Company Ltd. (Chivas, Glenlivet, Longmorn). You see a diagram below, in which the sales figures from 1996 (in million cases each 9 litres). You can easily see, that UDV sells more than the next two competitors sell together. The revenue of UDV in 1996 has been 10 billion EUR, which was 47% of the revenue of Diageo Plc. The operating profit before taxes had been a big 20%. This is a very good result on the German marketplace and UDV has also not to hide in the international arena.
Sales in Million Cases (9 Litres each) The sales figures of UDV look superior. But UDV sells in total less than 5% of all spirits world-wide and only 1% of the wine. The chances for UDV to grow further are very good, which lies also in the intention of the Chief Executive Officer of UDV Jack Keenan.
Corporate Car of UD But UDV has also realised, that there is also a misuse of alcohol. UDV intends to keep on in the forefront of all efforts to support a responsible use of alcohol in the society. UDV sponsors organisations like ‘The Century Council’ in the USA or ‘The Portman Group’ in Great Britain. How could such a concentration happen? The roots of UDV go back to the Distillers Company Limited (DCL), which was founded in 1877 and was taken over in a spectacular hostile way by Guinness in 1986. Today we know, that this takeover was also illegal. The history of the DCL started with a merger of six companies on May 1st, 1877 and represents an extraordinary sequence of growth, take-over and diversification. The merger of the six companies was leading the way with the foundation of the Scotch Distillers’ Association in 1865. With this foundation the distillers tried to stop the dying of the distilleries at this time.
In the first years after the foundation of the DCL, The United Kingdom Distillers’ Association (UKDA) was brought to life. This association got famous under its second name The Whisky Parliament. They devoted themselves to the promotion of distilling with patent stills. After some time they were a true classical cartel. This also leads to its decline in 1888. In 1884/85 the Caledonian distillery was taken over. Nothing spectacular happened inside the DCL until 1899. After a near bankruptcy due to debts of a sales company called Pattisons Ltd., the time of steady growth started for the DCL. In the twenties of this century the DCL dominated already the Scottish whisky industry. Until 1925 the DCL had taken over the three big blenders James Buchanan, John Dewar and Johnnie Walker. The takeover was prepared by long hand (since 1909) through Price Waterhouse. In the year 1934 the following malt distilleries belonged already under the roof of the Scottish Malt Distillers SMD to the DCL:
A lot more malt distilleries belonged to the DCL but their names do not play any role today. Therefore I will not mention them here. In the year 1927 the share of the DCL in the Scottish malt whisky production has risen to 50% and kept on climbing. In 1935 51 malt distilleries belonged to the SMD. The importance of the DCL raised so high that it moved from rank 39 of the 50 biggest companies in Great Britain up to rank 4 in 1948. In the same time, the capital of the corporation raised from 2 million to 130 million pounds sterling. The following years were characterised by a growing sales force, which got only delayed by the prohibition in the USA and the second world war. In 1924 only 2% of the profit of the DCL was generated by other activities than alcohol production. In the coming years a diversification took place and the DCL founded a chemical division for the production of acetone and butanole. This was the start-up in the solvent industry and lead to a fight with ICI. But this is another tale... |
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