Amarula producer reports strong spirits sales

Amarula liqueur and Bisquit Cognac producer Distell has reported a 10.4% revenue increase in 2014/15 despite “tough trading conditions”.

Amarula producer Distell has reported a 10.4% revenue increase in 2014/15

The South African drinks group saw its revenue rise to R19.6 billion and sales volumes increase 5.7% in the year to 30 June 2015.

However, due to exceptional costs and increased spend on staff, reported operating profit fell 1.8%.

In its domestic market, Distell saw the “biggest gain” from its implementation of a new corporate strategy, with South African revenues growing 11.8%.

The group had previously struggled against tax hikes and economic headwinds in the country.

“We are extending our reach and penetration of the domestic market and we have also implemented more rigorous pricing and promotion strategies across our brand portfolio,” said Distell’s managing director Richard Rushton.

“These factors, coupled with the growth of our core wines and ready to drink brands, have assisted our performance at home. What we are developing in South Africa can now be selectively applied in other priority markets.”

While Distell’s spirits volumes in South Africa were flat, the portfolio’s revenue grew 10.8% in the market, largely due to “premium brand efforts” and “new pricing strategies”.

The company said it had managed to “moderate” the decline of its brandy sales, but other spirits – including Amarula liqueur, the Three Ships and Bain’s Cape local whisky brands, as well as its Burn Stewart Scotch whiskies – “performed well”.

Bisquit Cognac also delivered “substantial growth”, with gains in South Africa.

The group had, however, been negatively impacted by the “persistently tough trading conditions” across the broader international front, with revenue in other international markets growing by just 3.8% despite the benefit of the weaker rand.

It noted “depressed conditions” in the Eurozone and “geopolitical instability” in the Commonwealth and Asia that outweighed the “strong gains” of its wine and Scotch whisky brands.

Looking to the year ahead, Rushton said: “The risks to top line growth momentum are higher in some markets.

“However, given our on-going geographic diversification, the progress we have made in optimising our attractive portfolio of strong, differentiated and price- and occasion-diverse brands and our improving routes to market, we are confident in being able to deliver continued growth to our stakeholders.”