THE professional management introduced in the middle of 1994 has turned Glenmorangie into the most dynamic of the whisky distillers and probably the most market orientated.

Faced with the power of Diageo in global markets, the smaller fry have to base their strategy upon innovation and speed in carving out new niches where they will not be swamped by the industry colossus.

However, Glenmorangie has decided it has been giving away profit by selling off mature fillings through its brokerage business. It will be keeping much more of its distillation in-house to provide the volumes for its case sales which carry up to three times higher margins.

That will result in a slight downturn in profitability in the first six months of the current year but will be more than compensated for in the full year, which should show a pre-tax advance of 13% to at least #9.5m if sterling holds its current strength.

The following year should see a considerably greater uplift, with margin and volume growth reinforced by more than #1m of annual savings from the Broxburn packaging facility.

Shorter term, the most encouraging aspect is that the core Glenmorangie malt is out-performing its sector - the company is fortunate to have Jack Daniels owner Brown-Forman as its major international distributor.

Also, it is getting price increases of up to 4% in sterling terms in international markets, which is probably one of the best achievements in the industry.

It is a moot point whether the stocks should be revalued at current open market prices. If they were they would be worth maybe #140m compared with their #57m book value and the group market capitalisation of #127m. Such a move would place no value upon the Glenmorangie brand and that is obviously a nonsense given the huge sum Bacardi paid for Dewar's.

There is likely to be little price action in the shares in the short term - movement is limited by the stock's lack of liquidity and this will not change until the two-tier share structure is abolished, probably at the time of a major acquisition. But this is possibly the most exciting sector investment and it is worth while tucking a few shares away to mature.