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Stock Spirits reports ‘strong’ first quarter

Drinks group Stock Spirits reported a sales increase during the first quarter of its 2019/20 financial year, boosted by Poland and the Czech Republic.

Stock Spirits witnessed growth in Poland and Czech Republic during Q1

Stock Spirits released a trading update for the period from 1 October 2019 to 6 February 2020, ahead of the group’s annual general meeting (AGM) today (6 February).

Stock Spirits said it is “on track for the year” and as anticipated its business witnessed “exceptionally strong demand” as customers stocked up ahead of the implementation of tax increases last month.

A 10% increase in spirits excise tax in Poland and a 12.3% tax increase in the Czech Republic came into effect on 1 January 2020.

In a statement, the group said: “Overall, the performance in both markets to date has therefore been significantly ahead of the same period last year although, based on previous experience of such changes, we expect the current quarter will see some consequential impact from the strong first quarter.”

During Q1, the total vodka market in Poland grew 4.7% by value and rose 2.3% by volume compared to the same period last year.

The total spirits market in Czech Republic increased 6.4% by value and 4.9% by volume during the first quarter.

In Italy, Stock Spirits witnessed slight declines in all categories it operated in. However, the group said it grew market share in brandy, clear vodka and flavoured vodka.

Beam Suntory deal

In addition, the firm said that it has secured the distribution rights for the Beam Suntory portfolio in Italy. Stock Spirits expects to begin distribution in April 2020.

The group said its €23.5 million (US$27m) acquisition of Italian grappa maker Distillerie Franciacorta in January last year has resulted in “enhanced access to key distribution channels and consumption occasions”. The purchase was also “instrumental” in landing the Beam Suntory distribution deal.

Stock Spirits is also awaiting a decision on its Polish arm’s appeal of its 2013 corporate income tax return to the Administrative Court. The firm believes it is “likely” the appeal will be upheld, with a court verdict expected by the end of this month.

The group said it is also monitoring the recently proposed extra tax on small format pack sizes (less than 300ml) of alcohol in Poland.

Stock Spirits said: “At this stage it is too early to identify accurately or with sufficient certainty the likely impact or any response that we may make. We are already considering a range of potential commercial and operational actions that we could take in response to manage or mitigate the situation, including legal action under EU law.”

On the day of the AGM, John Nicolson stepped down from his role as chair of the remuneration committee. He has been replaced by Kate Allum.

Nicholson’s departure comes after the group’s shareholder, Western Gate, recently called for his removal, along with Stock Spirits’ chairman David Maloney.

Western Gate said it intended to vote against the re-election of Maloney and Nicolson at the AGM today. It comes after the shareholder voiced concerns over the group’s governance, and mergers and acquisitions strategy.

Stock Spirits will announce its interim results on 13 May 2019.

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