Distillers' City Debate

Thursday 3rd May 2018

Bank of America Merrill Lynch, King Edward Street

This was my third Distillers' City Debate and each one has been fascinating. Beverages and Tobacco are two sectors which share many issues including the same stockbroker analysts and fund managers. It is always a pleasure to meet old friends in the City. Master Distiller and I go back many years to the days when I would bring BAT management to BlackRock for an inquisition on our latest results. The motion this year was "This house believes that family companies think about the long term, publicly-owned companies focus on the now".

We heard good arguments from Lizzy Rudd of Berry Bros & Rudd and Victor Jerez of William Grant & Sons which suggested that the long term planning and commitment of family owned companies allowed for higher levels reinvestment in business because there was less leakage of cash to shareholders. I was agin the motion at the start and remained so at the end. I do not disagree that family companies can take the long term view and doggedly hold out during the difficult years but some of the examples given were companies which had a family interest diluted down to 20% and were to all intents and purposes publicly-owned companies. Large corporations can have the financial resources to take long term bets on new categories but it all boils down to cash generation. When the cash dries up and the going is tough, the "now" is just as imperative for family companies as it is for publicly-owned companies. Family companies become publicly-owned companies when they need to access the capital markets.

After the debate, we were invited to sample products from a selection of distillers. Hendrick's Gin and Berry Bros & Rudd No 3 London Gin got my vote and they are produced by family companies. I think they also got Sandra's vote too.