Distell aims to go deeper into Africa
Liquor group has Ethiopia, Zimbabwe and Nigeria on the radar screen
Distell, the liquor group controlled by investment behemoth Remgro, is looking at more expansion opportunities in Africa after recording high double-digit growth in Kenya, Mozambique and Zambia in the interim period ending December.
Speaking at an investor presentation on Friday, CEO Richard Rushton said Distell — which owns best-selling brands like Savanna, Hunters, Klipdrift, Nederburg, 4th Street, Cruz, Bernini and Amarula — was constantly reviewing opportunities for investments in new African markets.
“Ethiopia is a big market that, along with Zimbabwe and Nigeria, is on our radar screen.”
In recent years Distell has focused on building up its African presence markedly by capacity expansion and acquisitions.
Rushton would not be drawn on what proportion of revenue and profits Distell hoped to generate in African markets over the longer term. “But East Africa is a central part of our growth plan.”
If markets in Botswana, Lesotho, Namiba and Swaziland were excluded, Distell’s interim volume growth in Africa was more than 16% with revenue increasing 43%.
A category breakdown showed that Distell’s cider and ready-to-drink brands saw a sprightly 15% revenue hike in African markets (excluding Botswana, Lesotho, Namiba and Swaziland).
Spirits sales on the continent soared 38.5% with wine revenues rising about 15%. Rushton emphasised Distell would continue investing in efforts to bulk up its African platforms. Recent initiatives have included securing a newready-to-drink brands partner in Ghana and starting construction of production facilities in Zambia.
The stout African performance contrasted a mixed performance by Distell in international markets where volumes crimped 6.5% and revenue edged up about 4%.
International cider, ready-to-drink brands and wine revenues were down 5.8% and 4.4% respectively with spirits lifting almost 8%. There were, however, some sweet spots in international markets — most notably a double-digit growth in single malt sales and “excellent” growth in whiskey in Taiwan.
Overall, Distell reported a 12% gain at bottom line to 570c/share with the dividend hiked 5.5% to 174c/share. Most impressive, though, was the 35% increase in cash flows to R2.4bn. Avior consumer sector analyst Ross Hindle said the interim numbers were was solid.
“The performance exceeded our expectations.”