Seagram slashes spend to boost yearly profits…

Seagram UK is understood to be slashing marketing spend on some of its top spirits brands in an effort to increase its yearly profits of 14m by 15 per cent.

The chief executive of Canadian parent The Seagram Company, Edgar Bronfman Jr, is understood to have told the UK company to bring in “double digit” profit growth or face being sold off.

The UK company is looking to cut annual overheads from 8.5m to 5.5m.

Seagram denies it is cutting marketing budgets, though it refuses to give figures. A spokeswoman says: “We are maintaining support behind core brands, and in many cases increasing it.” But one of the company’s ad agencies says budgets were reduced in the first months of this year, and future spending plans are uncertain.

Another source says Glenlivet Malt Scotch Whisky is having its marketing budget cut from 1.4m to 500,000.

Brands such as Chivas Regal and Captain Morgan rum are likely to lose their small marketing budgets, though the company contests this.

The cost-cutting comes as the Seagram prepares to make 25 redundancies from its sales and marketing teams, and a new sales-led structure is introduced. The marketing director’s role has been axed and its holder, John Ratcliffe, made commercial director. Former sales boss Ian Harris has become director of marketing.

One observer says: “Bronfman sees Europe as a mature market and wants to put money in Asia, where Seagram can sell Martell for 100 a bottle.”