STRONG pressure on margins and the strength of the pound against sterling meant profits at Irish Distillers (IDG) rose by just 3.2 per cent last year to £46 million.
Indeed profits from the core drinks business fell 2.7 per cent to £39.5 million on sales of £152 million. This was offset by a 62 per cent rise in profits to £6.5 million on sales of £414 million at the BWG food distribution subsidiary.
IDG chief executive Mr Richard Burrows said that the drinks side of the business suffered pressure on its margins, partly due to the weakness of sterling which favoured the group's main competitors in the Scotch whisky industry.
A 1.9 per cent fall in spirits' consumption in Ireland was offset by 6.25 per cent growth in Jameson whiskey exports to Europe, South Africa and the Far East. Overall, there was a marginal increase in volumes to just under three million cases.
On the home market, industry sales of whiskey were affected by the hot summer and were down 4.7 per cent, vodka sales industry wide were down 4.6 per cent while gin sales industry wide were down 0.5 per cent.
Mr Burrows said IDG's sales were broadly in line with the industry figures, but added that volumes in the first quarter of 1996 had gone well, despite continuing competitive pressures.
Mr Burrows emphasised that IDG needed to improve its cost base. "A lot of work was done in 1995, but we need to do more. We have to look at every way to reduce our costs to stay competitive," he said.
IDG currently has an early retirement programme in operation with the aim of reducing employment by about 50 jobs.
Within the drinks end of the business, Jameson remains the main product, with sales doubling over the past seven years to 850,000 cases. Mr Burrows said that Jameson was one of the four priority brands within parent company Pernod Ricard's portfolio. "The aim is to sell two million cases and reach top 10 brand status," marketing director Mr Francesco Taddonio stated.
On the home market, lower volumes sales of spirits were partly off set by a 22 per cent growth in sales of West Coast Cooler while wine sales grew by 9 per cent driven by a 17 per cent growth in sales of the Australian wine Jacob's Creek.
IDG is planning to launch a bottled "low strength spirits drink" on the Irish market in the next couple of weeks.
The growth at BWG was assisted by a full year contribution from the Haslett subsidiary in Northern Ireland. Haslett made a six month contribution in 1994. Turnover at BWG was up 36 per cent on the 1994 sales to £414 million.
As well as its cash and carry operations, BWG also has the Spar franchise in the Republic and the Mace franchise in Northern Ireland.
Mr Burrows said that IDG was in negotiations with Heritage Properties on a possible relocation of the Jameson Visitors Centre to the new Smithfield development.
He also stated that IDG was continuing to pursue a £800,000 claim against Cooley Distillery relating to stock purchases arising from the aborted takeover of Cooley three years ago.
