Distell full-year sales up 8%
South African drinks group Distell saw its fiscal 2019 revenue increase 8% to 26.2 billion rand (US$1.7bn), boosted by premium white spirits and a “strong” whisky performance.
In the year ending 30 June 2019, the Amarula cream liqueur and Bunnahabhain Scotch whisky owner saw operating profit hit 1.75bn rand (US$114.8 million), falling 26.3% year-on-year.
In Distell’s domestic market, South Africa, sales volumes fell 0.9% as “consumer confidence and disposable income remain subdued and with increased value offerings by competitors, particularly in beer”.
The group also said that it took “tactical pricing decisions” during the full-year, which had a “positive effect on revenue and margins”.
African markets, outside South Africa, delivered “exceptional” revenue growth of 20%, while sales volumes were up 10.3%.
All categories delivered double-digit growth, led by Nigeria, Kenya, Zambia, Ghana and Mozambique. Kibao Vodka and Hunter’s Choice Whisky in Kenya led the spirits portfolio’s growth.
Volumes in international markets outside of Africa declined by 10.6%. Distell said this was “in line with expectations as our focus continued to shift from the lower-margin wine and RTD [ready-to-drink] categories, toward our higher-margin premium wine and spirits portfolios”.
Distell’s spirits portfolio delivered “strong” revenue growth, up 11.2%, led by premium white spirits.
Cruz Vodka maintained double-digit revenue and volume growth after the group’s “successful” 75% acquisition in mid-2017.
Count Pushkin Vodka “doubled volumes and revenues off the back of white spirit trends and an expanded flavour range”, which launched during the period.
The firm’s gin brands also delivered double-digit growth.
Distell’s whisky portfolio grew 8.5% by volume and 12.9% in revenue, boosted by the premium and blended ranges, following a “refreshed strategy implementation” in 2018.
Scotch brands Bunnahabhain, Deanston and Scottish Leader experienced double-digit growth.
South African single grain whisky Bain’s also grew by double digits, while fellow South African whisky Three Ships showed “commendable double-digit revenue growth in a competitive category”.
However, Brandy volumes declined as “consumers traded down to competing value offerings”. Nonetheless, Distell noted that the overall brandy portfolio showed revenue growth.
Looking ahead, the firm said it “will continue to defend and grow our South African business with a targeted increase in market share across our portfolio, while seeking to drive category growth through innovation”.
“We will continue with our network optimisation programme to build a world-class local production footprint,” the company added.
Distell also announced that it will split its global operations into three business units: international spirits, exports, and premium wine through Libertas Vineyards and Estates.
The firm said: “We believe this gives us the best opportunity to grow premium spirits and wines in key markets and drive brand premiumisation in line with consumer demand.
“Distell will continue with a number of important changes to its operating model and investments behind its network optimisation alongside strategic future fit capabilities in growth and innovation, shared services and digital transformation.”
Earlier this year, Distell put the wheels in motion on a £10.5 million (US$13.97m) upgrade of Islay distillery Bunnahabhain.