Stock Spirits reports ‘strong’ off-trade sales

Prestige vodka owner Stock Spirits reported a ‘strong’ off-trade performance for the 2020/21 first quarter, offsetting its ‘lower than expected’ on-trade sales.

Stock Spirits published a trading update ahead of the company’s annual general meeting (AGM) today (4 February). The trading update covers the period from 1 October 2020 to 4 February 2021.

The company said the on-trade channel, which represents around 11% of Stock Spirits’ FY2020 sales, has been closed or restricted in many of its key markets. The firm hopes that restrictions will be lifted as vaccinations are rolled out. Stock Spirits said its performance in the on-trade has been mostly offset by its strong off-trade performance.

As a result, the group said its performance for the 12 months to September 2021 remains in line with expectations.

Mirek Stachowicz, chief executive officer of Stock Spirits, said: “We are pleased with the start that we have made to the year, and our performance is in line with expectations for FY2021 as a whole.

“Our longstanding off-trade focus has continued to help mitigate the impact of the closure of the on-trade across our markets, and our local sourcing and manufacturing strategy means that there has been no disruption to our operations since the start of the pandemic.”

The vodka market in Poland during Q1 grew by 4.3% in value, while volume dropped by 3.3%, compared to the same period in 2019/20.

Stock Spirits said it has a 30.1% share of the market compared to 29.7% a year ago. Stock Spirits also reported that it had attained the highest value growth rate of the leading companies in the flavoured vodka category during Q1.

On 1 January this year, legislation in Poland came into effect for additional taxes on bottle sizes of 300ml or smaller for alcoholic drinks. Stock Spirits said it has a number of commercial and operational actions to alleviate the potential impact. The firm said it is too early to disclose what the full impact of the move will be, however Stock Spirits believes it will not be significant.

In the Czech Republic, the spirits market rose by 11.9% in value and by 4.8% in volume during Q1, as the country faces continued premiumisation. The firm said its market share in Czech Republic remained stable.

Diageo deal

In addition, Stock Spirits will start to distribute Diageo’s full portfolio of premium and Reserve brands in the Czech Republic from March 2021. The move follows Diageo’s consolidation of its distribution operations in the market. Stock Spirits has distributed Diageo brands, including Captain Morgan, Johnnie Walker and Baileys, in the market since 2014.

Stachowicz added: “We are very proud of our partnership with Diageo in the Czech Republic, and the extension of our exclusive distribution agreement with them is a great opportunity for us to expand our portfolio of premium brands in that market.”

The spirits market in Italy grew by 7.1% by both value and volume in Q1. Stock Spirits value share increased from 6.7% to 7% by the end of December 2020.

Furthermore, Stock Spirits expects its Polish subsidiary’s appeal to the Supreme Administrative Court against the assessment of its 2013 corporate income tax return to be successful. There have been no developments regarding the appeal, and it is not expected to be heard during this financial year, Stock Spirits said.

In December 2020, the group’s Polish arm paid PLN19 million Polish złoty (US$5.1m) in taxes due to the Polish Tax Authority’s decision regarding its audit of withholding taxes in 2015. The company has started an appeal against this decision and expects to eventually recover this payment.

Stock Spirits will report its interim results on 12 May 2021.

Western Gate, which owns a 10% stake in Stock Spirits, said it intended to vote against the re-election of chairman David Maloney and the senior independent director of Stock Spirits, John Nicolson, at the AGM today.