JAMES Espey knows a thing or two about an economic slowdown. This year is set to feature his fourth recession; fifth if you count the dotcom collapse at the start of this decade. The man responsible for many of the most prominent drink brands, including Bailey's, Malibu, Johnnie Walker Blue, Chivas Regal 18-year-old, the Classic Malts and Le Piat d'Or, cut his teeth with International Distillers & Vintners during the 1973 oil crisis.
By the time the UK was emerging from the 1992 slump he had worked his way up to chairman of Seagram Distillers and president of the Chivas and Glenlivet group. Now he runs his own company, The Last Drop Distillers, and sits on the board of Irn-Bru ma
ker AG Barr, Fuller's brewery and Whyte & Mackay, where he chaired the meetings during its £595m takeover by Vijay Mallya, an experience he likened to "herding cats".
"It was chaos," he says. "Robert Tchenguiz would come in talking on his mobile phone then Vivian Imerman would come in talking on his, and before you knew it they would start having a real set-to. I said: 'Gentlemen, we need order in this boardroom so we have one rule: no mobiles and no BlackBerrys, and we all concentrate for three to five hours.' It worked. True to their word they never once picked up the phone and in the end it was a great deal for the company."
It is this sort of experience and CV that gets you an invitation from the University of Edinburgh Business School to address their MBA students on the pitfalls of business life. For Espey, who counts former Scottish & Newcastle chief executive Tony Froggatt as one of his graduate trainees, it will be a chance to pass on what he has learned in his 38-year career.
Tall and authoritative, he grew up in Zambia, the son of a colonial police officer, and still speaks with a clipped South African accent. His great-grandfather had been a telegrapher for Cecil John Rhodes. He says he can trace the Espey family back to the wave of immigrants who left Scotland for Northern Ireland in the 17th century. He entered the drinks business after doing a degree at Cape Town University, arriving in Britain at the age of 34. Five years later he was managing director of IDV.
Espey has a reputation for being outspoken, often controversial and once described Britain as "a larger version of Iceland". His address in Edinburgh promises to be a lively affair.
Returning to the current economic crisis, he lays the blame firmly on those who had their snouts in the trough. "There is going to be a lot of personal pain," he says. "And for that I am very sorry. But let's be clear: this recession has been about greed, debts, borrowing and a lack of respect.
"In the last five years there has been too much avarice, short-term thinking and inflated bonuses. When I was chairman of Seagram Distillers I had a bonus which was a percentage of my salary. Now people in comparable jobs are earning five times what I was paid. Are you telling me that in 10 years the salaries and bonuses have gone up five times? When I see someone on £100,000 a year walking out with a £1m bonus I think it is absolute rubbish. They have not been responsible for their actions because they can walk away from it.
"We are in this recession for two years. I do not see any upside until 2011. We haven't seen the worst of it, property prices will fall and unemployment will rise. In this climate if you are running a company never forget that turnover is for vanity, profit for sanity and only cash is reality. The time to buy an umbrella is when it's not raining and the time to negotiate an overdraft is when you don't need it."
Espey made his name in the Seventies as part of a team working for IDV including Peter Fleck and Tom Jago. Together the three transformed brands such as Bailey's, increasing sales from 40,000 cases a year to more than 7.5 million, and inventing the popular Eighties drinks such as Malibu and Le Piat d'Or. "It was great fun," he says. "At the time IDV was a very innovative organisation, we had a laboratory and were just told to come up with new ideas. Malibu was actually invented in Stellenbosch, South Africa, by Peter Fleck and myself. In 1979 we imported the first bottles of what was then a failed brand called Cocorico into Harlow, Essex. We couldn't register the name Cocorico so we changed it to Malibu and came up with the slogan 'It comes from paradise and tastes like heaven'. The rest is history. It now has a major distillery in Barbados and must be worth around a billion dollars. It's a true Caribbean brand, but it was invented in South Africa in the midst of apartheid when the country was the pariah of the world."
But there were also failures. On one occasion the trio attempted to launch a rival to the German white wine Blue Nun called Night Music, packaged in the same shaped bottle with a crescent moon. It bombed.
"What is interesting is that Bailey's failed in research," says Espey. "There had never been a product like it, so in the trials the consumer didn't know what to make of it. We were told to build the brand so we deliberately suppressed the research. It's an important lesson."
The three got back together last year to launch their own firm, The Last Drop Distillers, a small company which sources and sells premium blended whisky. At more than £1,000 a bottle, or £198 a nip at Gleneagles, it seems an odd time to launch such an exclusive product. But Espey believes its style will see it succeed.
"The era of bling is over," he says. "There has been too much bling and not enough style. Brands have to be consistently refreshed. Look at Beckham: he is a bling brand but he will have to reinvent himself. Chanel No 5 is a case in point: that has its own style and it has lasted. Walk down any high street, it is everywhere."
But the retail environment does not look good in 2009. Provisional export figures from HM Revenue & Customs to the year end of September 2008 show the amount of Scotch whisky being exported has decreased 3.4% in volume to 220.9 million litres. It is a trend that doesn't surprise Espey.
"Whisky sales will definitely slow down. You can pick a number, say 5% anecdotally. Spain is already falling. But Scotch is safe in the long term, people are not suddenly going to stop drinking it. It will be OK as long as we do not see a return to silly pricing. Scotch has got itself up to a level where it should be.
"We certainly feel there is an opportunity for a premium blend. The heart of whisky has always been blends. So here we are, three geriatric friends having fun, doing something different and I'm delighted that under Paul Walsh's blessing we have become the youngest member of the Scotch Whisky Association.
"I am a believer in discipline and respect. Out of all this pain I hope there will be an opportunity. Let us be grateful for a job, let us be grateful that we have a roof over our heads. I'm optimistic that this recession will be for the betterment of our society."
The full article contains 1280 words and appears in Scotland On Sunday newspaper.
