A spirit of adventure, distilled over 20 years
Sligo accountant has come a long way from a chance meeting with a ‘tourist’ in a Dublin hotel bar
Donard Gaynor’s knowledge of the global spirits market, particularly the buying habits of whiskey drinkers, is older than some of the rare malts resting in his private cellar at his home in New Jersey.
Formerly from Sligo, Gaynor has played a key role in the buying and selling of some of the world’s best-known spirit brands over the past 20 years, including the sale of Seagram’s global business to Diageo and Pernod-Ricard, and the expansion of US bourbon maker Beam into a major international business, including the company’s $95 million (€72 million) acquisition of Cooley Distillery last year.
After joining Beam, in 2003, Gaynor led its international division. The company had sales of $1 billion and operating income of $300 million when he joined. When he left, almost a decade later, sales were $2.4 billion and operating income was about $700 million.
The company’s brands include Maker’s Mark Bourbon, Canadian Club Whisky, Courvoisier Cognac, Teacher’s Scotch Whisky and, following the purchase of Cooley, Kilbeggan Irish Whiskey.
Speaking in New York, ahead of a speech at a dinner of the Ireland-US Council business organisation in Dublin tonight, Gaynor displays great enthusiasm for the subject of whiskey and other spirits, even though he retired from Beam more than a year ago to pursue other business interests away from full-time work. He also has an eye on how big the spirits market could grow.
If the Chinese market ever took off like other markets around the world, there wouldn’t be enough whiskey or cognac to meet the demand, he says. Drinks makers are struggling to keep up with the demand. The likes of television programmes such as Mad Men, whose main character Don Draper sips Canadian Club in most shows, have made whiskey drinking cool.
He says the whiskey market today breaks down into sales of about 90 million cases of Scotch whisky, 30 million of US whisky, 25 million of Canadian whisky and five million of Irish whiskey.
“If you can look at what Irish whiskey is doing – growing very strongly, like double-digit in the US – it is not out of line to think when Irish whiskey will cross 10 million, 15 million, 20 million cases. That is why you see Pernod expanding the way they are and all sort of characters getting into it,” he said.
The potential profit in whiskey has drawn a host of colourful players into the market. In Northern Ireland, lottery millionaire Peter Lavery is turning part of the former Crumlin Road prison in Belfast into a distillery and has reached a supply agreement with Beam, Gaynor says.
He has also heard everything from distilleries being set up in fishing villages in west Cork to plans for distilleries in Carlow and other areas of the country on sites where old distilleries once operated.
“I get calls all the time asking me what I think [about a certain distillery]? What I say to people is that you better realise that this is stuff you have got to put away. The law is three years. The premium end of it is eight, 10, 12 years of ageing. You are not going to see your money for 15 to 20 years,” he said.
Gaynor points out that John Teeling and the other shareholders in the Cooley Distillery didn’t see a return on their money for almost three decades. He worked it out that they made 1 per cent less than the shareholders at Warren Buffett’s Berkshire Hathaway, although Cooley paid out no dividends to shareholders over that time. “I am sure that some of them even forgot their shares,” said Gaynor. “John stays very close to his shareholders. There were a number of them that couldn’t be tracked down. I think a number of them were dead.”
The main attraction of Cooley to Beam was that the US company did not have an Irish whiskey. At its heart, Beam is a whisky company, and specifically America’s largest bourbon manufacturer, says Gaynor. The company had brought Scotch and Canadian whisky into its brands in 2005 with the acquisition of Allied Domecq brands, but it was missing an Irish whiskey.
Beam had also been distributing Tullamore Dew for C&C and could see whiskey was doing well in Germany and eastern Europe, so it started talks with Cooley in 2008. The US company went through a number of changes over the following three years – a new chief executive, the downturn struck and the firm’s parent underwent changes that eventually led to Beam emerging as a public company, in October 2011.