Cask Whisky Association Limited

Eyebrows were first raised when this organisation was registered on 18th August 2023 (click here for the link to Companies House), with Simon Michael Aron and Colin George Hampden-White as the two directors.

A few snarky comments on various social media platforms about this being a company (Limited on the end) as opposed to a charity or other such entity, was more about the ignorance on the rules, regulations and laws around the formation of companies and other entities in the UK.

Yes, this is a company, but it is a company limited by guarantee, not by shares. There are no shareholders because there is no share capital. It has directors and must file its accounts and annual returns each year but it is controlled by its members. Typically the members would be guarantors for any liability, but this is usually a nominal amount (for example £1 for each member).

Members typically pay an annual membership and the amount is set each year by the directors. There may (or may not) be transparency about this. All members might pay the same membership each year, or might not.

The real meat and bones of what this organisation might be up to would be within the Article of Association. You can download your own copy if you CLICK HERE.

There’s a lot of generic blurb and waffle there, but there are some points of interest. Page 10, Section 22 and 23:

In all fairness, neither Simon nor Colin are getting any DIRECT money from this entity. There’s no salary, no compensation when they leave office, although they can in theory claim normal expenses. So far so good – the entity looks like it has been setup as a not for profit, and the two directors haven’t created some fat salary gravy train like *cough* that other whisky association in Scotland.

But let’s look a little deeper at the directors. Starting with Simon.

Simon Michael Aron

Simon Michael Aron is currently involved with 6 other companies on Companies House records, 5 of which seem to be involved in either trading casks or or peddling whisky. Colin George Hampden-White also being involved in a cask trading company, Cask Trade Limited, a business that also has Simon Michael Aron as a director, with Simon Michael Aron being the UBO (ultimate beneficial owner). So Colin, essentially works for Simon at Cask Trade Limited.

Cask Trade Limited

Cask Trade Limited ain’t doing too bad it seems. They did £20.8 million in turnover, and £5.6 million in gross profit. Take note of that everyone, and in about 15 seconds with any normal calculator you can work out theres a 27.2% markup on casks they are peddling.

Think about that for a second. Assuming that this is an “industry” (dare we even call cask trading an industry?) norm, then for every £10,000 a punter spends on a. cask, £2700 of it gets trousered by the brokerage company. Even worse, if we assume that this “investment cask” nonsense is real, then a cask buyer couldn’t even break even on a resale in the first 5 years!

Simon Michael Aron

<<PLACEHOLDER>>

Colin Hampden-White

Colin has an interesting background. He started off as a photographer in 2005. Initially for the Financial Times, then the Greater London Authority, before sliding into the world of whisky in 2014 “as the Managing Editor of some whisky related content “procuring casks” for Stilnovisti.

He claims to be a NON-EXECUTIVE Director for Cask Trade Limited (which conflicts with what’s recorded at Companies House) and Chair of the Advisory Board at Cask Whisky Association. You can check all this out from his LinkedIn profile.

Where it gets interesting, and underlines the general flaws in the Scotch Whisky Industry, not least the old circle jerk that is Keepers of the Quaich, is how someone leaps from photographer, to cask peddler, to Keeper of the Quaich, all be shaking the right hands at the right time, and blowing the right amount of smoke up the right arses. Clearly no one within the KOTQ actually bothered to do any due diligence on Colin, or they would have seen he was up to his elbows in shonky wonky stuff……….but that is of course assuming that everyone else in the KOTQ are squeaky clean. Right?

Stilnovisti Limited, at least the company registered in the UK, seems to be nothing more than a shop window for something that goes on out in Poland. It has coasted between compulsory strike off and barely existing for as long as it has been registered (2009) with notices of compulsory strike off going back to 2010. You can check that out yourself on Companies House if you CLICK HERE.

As for the Polish operations of Stilnovisti – well, ask any of your Polish whisky loving friends for the stories that go around about that circus. They make Bear Blowman sound legitimate! Headed up by Krzysztof Maruszewski, who has been cranking out “Alternative Investments” since 2006, can you guess what circle jerk he’s a part of? Yes, that’s right. He’s another Keeper of the Quaich! We’ll no doubt do articles on the Keepers of the Quaich and Krzysztof at some point in the future!

For more Whisky Industry News (REAL news, not prettied up nonsense) then CLICK HERE.

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Cognac Hanged – The Back Story

The backstory to this is really simple. When anyone goes out to bat against China, whether that’s tariffs, taxes or duties on Chinese products, or kicking up a shit storm with anti-China narrative, then China always has a way to deal with this. More often than not, it’s a tit-for-tat deal where China will pick a product category or an industry to retaliate with. The rights or wrongs of any of these actions are not something we have an opinion on but there is something very human about the thought that if someone walks up to you in the street and slaps you around the face, it’s probably justified to give them a slap back right?

China first announced its anti-dumping probe on brandy from the EU back in January. China’s view is that European brandy is being sold into China at below market rates. Logic would infer that this is directly related to the EU trade case of tariffs being imposed on Electric Vehicles made in China, slapping provisional duties of between 17.4% and 37.6% on each vehicle.

China’s Brandy Market

China is actually a massive producer of local brandy producing in excess of 250,000 tons in 2022 and has been producing since 1892. In fact, one of the bigger brandy producers, Changyu, won a gold medal in the 1915 Panama Pacific International Exposition in San Francisco. Changyu typically produces around 40,000 metric tons per year and prices its products on par with Hennessy VSOP at retail within the Chinese market.

In terms of imported brandy, China currently imports about $1.57 billion worth of brandy (of which cognac is a type of) with 99.8% of this coming from France.

Why Brandy?

It’s not quite tit-for-tat. 1 in every 5 electric vehicles made in Europe, is actually made in Saxony in Germany. So logic would suggest that hitting something from Germany would be the right step. However, all the major German car manufacturers have a massive presence in Germany. They are huge employers and contribute a significant amount to the Chinese economy.

The second largest producer of electric vehicles in Europe is France, led by French owned manufacturers. This ties in with the ongoing history of souring Franco-Sino relations which have been degrading since 2018. Too much drama for a whisky website, but it brings us all to where we are now, with an impending monster tariff about to be slammed onto cognac, which would decimate the export market for french producers.

Whisky FTW

With cognac seemingly about to being priced out of the market, this could be a catalyst to take whisky to the next level in China.

While the market has been slowly waking up to the fact that cognac is generally a complete rip off to Chinese consumers, it still has a massive presence in China and dominates imported spirits.

With XO only being matured for 10 years, and being priced past the average cost of an 18 year old Scotch, and the market dominator VSOP only clocking up 4 years in a cask but being priced higher than a typical 12 year old Scotch, Chinese consumers were already flocking to whisky in droves. We were already on the path where cognac hanged itself.

These anticipated tariffs are only going to accelerate that process……..which probably explains why Pernod Ricard and Camus have piled in on producing whisky in China. Three cheers for President Macron for helping whisky in China!

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Ed Tiedge has had something of an interesting career. Despite looking like a former doorman at a dodgy looking club in some badly lit subdistrict of New York, Ed actually started his career as a bit of a baller in the financial services industry, clocking in time with ABP Investments, Merrill Lynch and Sailfish Capital Partners.

6 years into a life with spreadsheets and Power Plonk slide decks, he threw it all in the air and decided to become a booze fiend. While his first adventure was an epic failure, he picked himself up and served 7 years in Belize – not in jail – at a rum distillery.

He’s now out in Vietnam alongside Quan Nguyen and Michael Rosen, the notorious White Dinosaur of Hanoi.

You can find out more about Ed on LinkedIn if you CLICK HERE

You can see more Movers and Shakers if you CLICK HERE.

You can find out more about Ve Di Vi if you CLICK HERE.

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The bank’s analyst pointed out that it is probable that the company will signal that its organic sales growth for FY25 may not align with its medium-term goal of 4-7%.

Deutsche Bank’s own estimate stands at 2.1%, with the Bloomberg consensus at 5.3%. This adjustment comes in light of persistent difficulties and excess inventory issues in key markets such as the United States and China.

China has become a bit of a farce market for Pernod Ricard over the last few years. Their attempt to create an elite, VIP club, to essentially milk the top 1% of Chinese society, quickly blew up in their face when casks sales for their Chinese distillery, The Chuan, were undermined when the first bottling from The Chuan was actually made with imported Scotch. Staff members from The Chuan were actually recorded on video talking about this (the video was originally released on YouTube and LinkedIn before Pernod Ricard’s lawyers got it taken down)

This left the elite VIP customers of Pernod Ricard China, wondering what was wrong with the new make spirit from The Chuan if it had to be smothered with imported Scotch to make it good enough to bottle. Needless to say, they aren’t buying any more casks from The Chuan.

As for retail on the product. Within weeks of its release at an RRP of ¥888 (US$122), distributors were dumping it at less than half the retail price, with some distributors throwing it out of their warehouse door for as little as ¥400 (US$55) per bottle.

The revised price target by Deutsche Bank suggests a lack of confidence in Pernod Ricard’s growth prospects. Investors often rely on such assessments to make informed decisions regarding their holdings in the company’s stock.

The Pernod Ricard Share Target slash from Deutsche Bank provides an insight into the anticipated trajectory of Pernod Ricard’s sales growth, which is a significant factor for the company’s strategic planning and investor relations.

Pernod Ricard are not the only French alcohol producer feeling the pain. There are considerably bigger problems going on over at Remy Cointreau, where their share price has taken a pounding. You can read more about Remy Cointreau and their struggle if you CLICK HERE.

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2023 was a record year for them, batting in €1.548 billion in sales, demonstrating literally a 50% increase in just two years. 2021 was €1.010 billion in turnover. Gross profits were in 2023 were €429 million, not far off double the €236 million in 2021. Profit margins sat at 27.7% (up from 23.4% in 2021) and the net profit was €293 million, up from €144.5 million back in 2021.

Remy Cointreau Share Price Chart

The numbers on the annual reports for the last three years seem to be going in the opposite direction to the share price. Hence our question, WTF is going on at Remy Cointreau?

Friday 28th June 2024, Remy Cointreau shares were trading at a 52 week low on the US markets, dropping as log as $8.15 a share,

On a 3 year chart, the stock is down 56.46%. But it’s worse than that. Taking a chart back to September 1988, when Remy Cointreau first listed, and we’re talking about a stock trading 70.56% lower than it did 36 yeas ago. It completely defies logic.

Analyst ratings on the stock are all on the downside. UBS reduced their target price on June 7th 2024, after lowering its rating on Remy Cointreau as recently as April. JP Morgan rates RemY Cointreau as a SELL, reiterating that sell rating on June 6th 2024. Barclays lowered their target price on 10th April 2024, and the only big name to rate it as a buy is Deutsche Bank.

So what’s going wrong?

Firstly, it’s the perceived over dependency on Cognac, which, in the 2023 annual report was responsible for 71% of the sales of the entire company. That’s 71% across just two products, Remy Martin and Louis XIII – with no doubt the lions share of that being on Remy Cointreau.

Add in the complexity of 50% of revenue being “The Americas” (read “the USA”) which is very much dominated by Hennessy, and the dominos start to stack up. Hennessy have a 60% market share in the USA, putting out over 4 million cases of product into the land of stars and stripes. In the on-trade, Hennessy takes up 85% of cognac sales in Union Venues and it’s probably fair to say that this is a general trend across the US. Remy Martin ranks third, with 4 brands taking up the remaining 15% of cognac sales in Union venues.

Next we have the 33% dependency on “Asia-Pacific” – which doesn’t take a genius to realise that this mostly means China. Sure, there are markets in Taiwan and Singapore and a few other key cities, but we all know, China is the future for most alcohol producers.

China is worlds largest consumer market, 1.3 billion people. It’s music to the ears of shareholders. Even when you strip off the 50% of people that don’t drink alcohol, plus the women, the children and the old folk – you still have one of the largest markets for alcohol in the world.

But when you factor in the possible anti-dumping case against French Brandy (of which cognac falls under) and a pretty limp effort at developing the market by the in country team in China, there’s no sunshine and moon beams for Remy Cointreau in the PRC. (We’ll no doubt do an article on Remy Cointreau’s disasterous adventures in China in the near future – watch out for it, it will be a great read!)

There’s also the massive debt mountain they have stacked up over the last few years. They have been lashing out bounds like fun coupons, all of which are tradable for equity in the company – which either leads to non-trivial interest payments (which eats into profits and dividends) or share dilution. Either scenario isn’t nice for a long term investor.

What Can Save Them Now

Diversification! As everyone knows, you can’t put all your eggs in one basket – and currently Remy Cointreau has got pretty much all of it in just two. Cognac and the US of A. They need to develop other markets, faster (China for sure, but not with the current team) and other products, either by in house development or by acquisition.

More whisky – an American distillery or a new world distillery would be a really smart move right now. Hanging everything on Bruichladdich is too big a gamble. Sure, they have Westland, but that’s an American Single Malt whisky and way too new a category for the US market which is dominated by bourbon.

A journey “Back to the Future” with an investment in Waterford, led by Mark Reynier – one of the people that built up Bruichladdich to sufficient scale for Remy Cointreau to buy them out back in 2012.

Alternatively, a big bumper boost in growth by a merger or acquisition of another stable of brands. Campari would be too big (in fact, rumors are that Campari have been sniffing out a way to just swallow Remy Cointreau whole) but something like Camus could be a useful and strategic decision. Despite Camus being a tiddler, they have an amazing footprint in the China market, and put Remy Cointreau to shame. Putting Cyril Camus in the big seat to lead China, on a merged Remy Cointreau Camus would be the smartest move at the least cost.

No thanks needed Eric – you’re welcome to our free advice.

For more news about Remy Cointreau CLICK HERE.

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As an inspiration to all Bar Stewards, Andy spent the first half of his career until now (a whole 8 years) serving drinks across no less than 6 different jobs, with a brief 7 month stint in the kitchens as a “Demi Chef de Bar”. We’re not entire sure what a Bar Chef is, but we’d guess it’s somewhere between a microwave operator and a waiter. But none of that matters when you get into the big leagues eh?

Nice to see that Suntory Global Spirits are finally starting to get a big more exposure to the fact that they are the second major investor and shareholder in The Macallan. Not that it’s a secret. Pretty much everyone in the serious side of the industry knows that. But it’s just never really talked about. It’s there alongside failed Karen’s who go gunning for industry legends under fake stories about sexual harassment, and weirdos in blue jumpers who scream that all cask traders are scammers except those who wear the official uniform of legitimacy……a blue jumper and an otter beard.

Congratulations to Andy Walch!

Andy can be contacted on LinkedIn if you CLICK HERE

To read more about Movers and Shakers – CLICK HERE.

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Pitched to the whisky loving global community as a £6.5 million project (although the maths seems a bit questionable, as even on their last published accounts there’s nothing like £6.5 million on the books in assets) the project seems to have had a few bumps in the road to get to production.

November 2011 they were weeks away from being struck off the register, and there were some brotherly handbags in September 2023, when Angus gave his brother the boot as a director, all nicely packaged up as “buying him out”.

3 chunky financial charges made against the company on 5th April 2024, and we can skip forward to June and they actually have a working distillery.

But it’s all good right? Angus is a jock, so he’ll fit in with the clicky clicky circle jerk that is the Scotch Whisky industry. He’ll get a few invites to some dinners and no doubt win some stickers for whatever he start bottling in a few years.

Or will he?

We’re keen to got a gob full of whatever this mysterious 130 year old recipe will produce at Benbecula Distillery. Our guess is……mashing grains, fermenting them with yeast, distilling it, and then maturing it in barrels will probably result in “whisky”. Unless we’re missing something about the relevance at this lame attempt at a bit of marketing spin, and it really is something unique going into the mix.

Our money is on crabs. As a former prime crabbing location, a bit of a fishy taste with some crunchy shell would really make this distinctive in an over saturated Scotch market. Taking the whole “maritime flavor” to the next level of geeeenius.

But then of course, it wouldn’t be whisky would it?

Doh.

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While we’re not really sure how a third anniversary warrants a bottling like this, we can understand the greed motivating a £10,000 ticket on a bottle. Oh, and of course, they need to recover some of the money spent on advertorials for this bottle.

This is the second limited edition bottling that has been released from Brora since it reopened, and this is only available for sale at the distillery itself. The 44 year old “Untold Depths” was distilled in 1977, aged in Warehouse 1, and it came into existence during the 12 years or so that Brora was using peated malt.

Brora 44 Marketing Blurb

“The second in a series of releases from the distillery, Untold Depths is a classic pairing of a gentle cask and medium peating, which explores the full depth of taste of which Brora is capable,” said Dr Craig Wilson, master blender.

“On the nose, the whisky holds waxy hints of fragrant incense and green grape skins drift through light peat smoke, then dried herb and scented oil slowly rising through a swirl of buttery toffee. Waxy-smooth, the sweet, lightly fruity taste reaches a long and fragrant finish with a pinch of white pepper.”

The launch of this bottling ties in with the fact that spirit produced when the distillery first reopened in 2021, is now 3 years old. It’s officially entitled to be called Scotch Whisky.

Although it won’t be bottled before there’s an age statement worth talking about, you can actually rock up to Brora for a tour and sample some of the whisky they have. If you’re feeling flush of course. Tasting isn’t just for anyone – it’s for those that shell out £900 for a 5 hour yawn fest entitled “Eras of Brora”. Yup – 900 quid to get a tinkle of 3 year old malt. Just to prove there’s no typing error there, we’ll just repeat that. £900 for a tour!!!

We aren’t really sure on what planet that makes sense, but it doesn’t here, on planet Earth.

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Just remember who broke the story that Bladnoch Slashes Production By 75% Thursday 27th June 2024, before anyone else steals it!

It’s been 9 years since Bladnoch was taken over by Australian entrepreneur, David Prior, after it was liquidated in 2014. Prior teamed up with Gavin Hewitt to form the new Bladnoch Distillery Limited on 9th December 2014.

It was originally called Pure Scott Limited, originally intended to be the vehicle to create the Pure Scott blended whisky for the Australian market, owned by the Australian parent company, Pure Scott Pty Limited, (registered in February 2014, ACN number 168 059 130). Hewitt came on board as a director on 25th June 2015, although later resigned on 14th September 2017 – only to get back on board on 1st January 2024. No, we don’t know what that’s all about either.

A quick skim around Companies House in the UK, and a gander at their last published accounts (20th December 2023, TOTAL EXEMPTION FULL ACCOUNTS is the interesting one) reveals a few items of concern. To make it easier, we have it for DOWNLOAD HERE.

Page 2 highlights include almost £33 million in short term debt (debt that has to be repaid within one year), another £14 million due after 1 year. There’s £1.5 million in a bank loan at a horrifying 7.49%, a “directors loan” of £11.7 million, a £12.1 million ABL facility (which has actually been increased to £16.5 million) and another £12.6 million from PFF (Prior Family Foundation) which rakes in a nice 7.49% per year earner, PLUS forex provisions.

£47 million, assuming it’s all around the 7.49% mark, is £3.5 million a year down the drain before Team Bladnoch even gets out of bed.

Here’s where the problems are:

On page 10, they have £15.2 million in stocks (raw materials, work in progress and finished goods) and £6.6 million in debtors. The stocks likely have a gross profit of £3 million and the debtors likely have gross profit of £1.5 million. Factor in the circa 40 headcount even at a modest average salary of £20K per year per head, and that’s £800K, plus basic running costs of the facility – there’s just not enough money left over to even repay the interest on their debt mountain – let alone to invest in casks, grains, yeast, and production costs to fill barrels. Now it’s logical to understand why Bladnoch Slashes Production. They don’t have enough pennies to produce anything!

There’s a whiff in the air…….that whiff of smoke, that usually hides a few mirrors.

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This promotion is the 5th promotion for Nicki Clifton during her almost 13 years with the group (formerly Beam Suntory, until the recent rebrand to Suntory Global Spirits).

Congratulations from the team here at Whisky Galaxy.

You can reach out to Nicki Clifton through LinkedIn.

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