THE managing director of Inver House Distillers has declared he expects to see more takeovers in the burgeoning Scottish gin sector as the tide of new products shows no signs of abating.

Scotch whisky veteran Martin Leonard, who joined the Airdrie-based distiller in 2000, said new gins are continuing to hit the market on a weekly basis.

Scotland Food & Drink says there are now more than 100 Scottish gin brands, with the value of exports worth more than £400 million, according to the most recent statistics.

With Caorunn gin, made by Inver House at its Balmenach distillery in the Highlands, growing sales by 34 per cent last year and continuing to rise, Mr Leonard said the category still has scope to grow. But he expects to see more of the kind of deals which have seen Beam Suntory acquire London’s Sipsmith and Ian Macleod Distillers take over Edinburgh Gin in recent years

Speaking one year after moving into the top job at Inver House, which is owned by International Beverage Holdings of Thailand, Mr Leonard said: “I can’t help feeling there will be a bit of rationalisation, just because there are so many products chasing a limited amount of shelf space.

“Some of the successful ones will end up being picked up by larger companies. In the past you have seen things like Beam taking on Sipsmith, and Pernod Ricard taking on things like Monkey 47.”

Mr Leonard ruled Inver House out from making any acquisitions for the time being. In addition to Caorunn, which according to AC Nielsen was the top-selling “super-premium” gin in the Scottish on-trade last year, the distiller already has other gins in its stable, including Coldstream.

While The Gin Guild suggests there are now more than 600 UK gins from an estimated 200 distillers, Mr Leonard believes “there is still scope for growth.”

He said: “The interesting question will be whether it is at the expense of vodka. I feel it [gin] is a different sector for whisky, so I’m not expecting it to have a big impact on that.”

Many of the newest gins have been created by Scotch whisky distillers seeking to establishing a revenue stream while they wait for their malts to mature. But the explosion of Scottish gin has brought some controversy. Established players are concerned that some companies are launching so-called Scottish gins based on spirits entirely distilled elsewhere, with perhaps only an infusion of botanicals taking place in Scotland.

Mr Leonard said he “shares these concerns”, and stated: “A virtual gin is something that is not that difficult to do. You get into the realms of misleading marketing when you start implying the provenance of products that don’t have that provenance.

“That’s been a concern and rightly so. I’d like to think one of the strengths behind Caorunn is that it is produced in the Cairngorms at Balmenach Distillery. We ship stuff up there at a cost, we produce it in smaller batches and then ship it back down.”

He added: “It probably borders on to things like Brexit as well, because European definitions of spirits drinks are enshrined in a European instrument. That covers whisky and gin and it’s going to be one of the pieces that will transfer to UK legislation, so maybe that provides an opportunity to look at things like provenance.

“Scotch whisky is easy – there is geographical indication which has always been part of Scotch whisky. With gin, production and location has been more varied.

“Certainly, a few have played fast and loose with the marketing of some of these gin brands.”

However, Mr Leonard said the industry is still waiting for guidance from the UK Government on how the transfer of such regulations from Europe to the UK will work. It also remains in the dark over the future of its trading arrangements with Europe after the Brexit date of March 29, 2019.

Mr Leonard said: “We are in a period where, and I guess a lot of industries are saying it, there is quite a lot of uncertainty. It sounds like a broken record, but the fact is it’s true. We really don’t know what we are heading into.”