HIGHLIGHTS OF THE CHAIRMANS COMMENTS TO THE COOLEY DISTILLERY AGM 18TH September 2003
Results
A 27% increase in profits in the tough environment of 2002 was a good result.
- The good trading and profit performance of 2002 continued in the first half
of 2003. Though sales growth slowed down profits are up due to higher prices.
- I think that it will be difficult to continue this improvement in the second
half of the year though we have added some new customers.
- The strong Euro is affecting our ability to increase prices in the UK and
makes Scotch more competitive particularly in France our main market.
- Cooley has benefited from the 42% duty increase levied in the 2002 budget
in Ireland as consumers have purchased off trade instead of on trade and have
moved to better value brands.
- Sales in Ireland are ahead in a market that has declined by 25%.
Strengths of Cooley
- Cooley is a rare gem. It is literally one of a kind. The achievement of building
two distilleries, creating world-class whiskies and selling in 45 markets is
a credit to all concerned and should not be underestimated.
- Cooley supplies every UK multiple, the Irish multiples and almost every French
multiple with Retailer Exclusive Label whiskey. Few if any indigenous Irish
companies have a similar record.
- Our three single malts led the development of an Irish malt whiskey segment
and are rightly regarded as world class. Today, we launch 12-year-old Connemara
Peated Malt regarded by our consultants as one of the best whiskies in the world.
I do not exaggerate.
Marketing
- In the last few years we have been distilling at a rate double our current
sales level. This is a challenge and an opportunity. - By 2007 we need to double
our sales levels to 6 million bottles a year.
- We have colossal strength in Retailer Exclusive sales but we need marketing
partnerships where our branded whiskies can be matched with strong distribution
networks.
- We have contact with a number of potential partners but nothing is close to
fruition.
- We are expanding our branded marketing putting full time staff in the UK,
US and Ireland. The benefit of this will be seen next year.
- Over the next 12 months we will focus on Spain, Korea and Japan. These are
three of the largest whiskey markets where we have no presence.
Finances
- The nature of our industry requires massive levels of stock. To grow you must
lay down stock years in advance. This requires working capital. Marketing is
expensive and takes years to payoff. We are making the investment in both stocks
and marketing. - The consequence of theses activities means that our debt levels
of 8 million euro will decrease slowly.
- I am once again looking at the possibility of finding a cash shell in which
to reverse Cooley. This is not likely to produce results in the short term.
