South Africa-based Distell saw revenue grow 3.8% in the second half of 2020, despite multiple alcohol bans in the company’s home market.
Amarula owner Distell’s revenue for the six months to 31 December 2020 reached R15.4 billion South African rand (US$1bn), with volume growing by 0.8%. Distell’s revenue, excluding excise duty, grew 2.5% during the six-month period.
The firm said it had lost 41 trading days during the six months due to the second and third bans on alcohol in South Africa, which caused a 0.5% revenue dip and a volume drop of 1.4% in the market. Distell said the small decline was due to its ‘diverse’ portfolio of ‘strong’ brands and ‘improved customer execution’.
Distell CEO Richard Rushton said: “The impact of the Covid-19 pandemic and alcohol sales bans in South Africa have put the resilience and agility of our domestic business to the ultimate test.
“Our diverse portfolio has really played well to changing income and occasions due to lockdown conditions during the pandemic.”
Sales in African markets outside its home country grew 12.7%. Focus markets on the African continent, outside the Botswana, Lesotho, Namibia and Eswatini (BLNE) countries, grew revenue by 19.9%.
Kenya, Nigeria and Mozambique all recorded ‘strong’ double-digit growth, boosted by investments in a route-to-market (RTM) rollout and production. This move has seen the customer footprint grow to 37,500 sales outlets in Africa (excluding BLNE) from 9,000 two years ago, Distell added.
BLNE countries were negatively impacted by the pandemic, Distell noted, due to border closures and alcohol bans, but still recorded revenue growth of 4%.
The Africa region contributed 64.2% of revenue to Distell, increasing from 1.4% to 18.2% in the period. Revenue in global markets outside its home country declined by 9.1% due to the end of ‘high volume, low-value plays’.
‘Flat but resilient performance’
Rushton said: “Our RTM investment in our Africa and focussed international strategy helped to offset the flat but resilient performance in our domestic market, which we are extremely pleased with given the 22% trading days that were lost due to alcohol bans in South Africa.”
Single malt Scotch brands Bunnahabain and Deanston led growth across the firm’s spirits portfolio in all major markets, alongside Scottish Leader whisky in Taiwan. Amarula liqueur rose 34.9% in revenue, despite the ‘current pressure’ on global travel retail, Distell said.
Furthermore, the group implemented a business-to-business (B2B) sales platform in early 2020, which saw its revenues and volumes grow at a faster rate than other channels.
Distell said growth in its e-commerce business for the period has already surpassed what was achieved in the previous reported full year.
Rushton added: “We are confident in our ability to navigate disruption, generate cash and in the appeal and strength of our diverse and trusted portfolio of brands. This, alongside our key RTM investments, stronger levels of customer execution, higher production efficiencies resulting from past investments and more liquidity headroom will enable us to navigate any short-term challenges in the current environment.”
Via The Spirits Business