SA’s under-pressure consumers switching to spirits, Distell says
The beverage maker says it will capitalise on a shift by consumers to harder liquor amid subdued consumer spending
Distell, the maker of Amarula, Klipdrift and Hunter’s Dry brands, says pressure on consumer spending is resulting in a shift to harder liquors, which will be a focus area for the group in coming months.
Consumers were seeking value, the group said on Wednesday, and it would be seeking to defend its market share in whisky and brandy, while building on the performance of white spirits.
Distell reported low single-digit volume declines in its first quarter to end-September, but a single-digit rise in revenue, as it battles subdued conditions across SA's retail sector.
“The outlook for economic growth remains mixed with varying levels of political and economic risks in many of the markets in which Distell trades,” it said.
As a result, it would be focusing on cost containment, although this would be balanced with maintaining market share and improving revenue.
The group's wine portfolio, which includes brands such as Nederburg and Two Oceans, had seen flat revenue growth, the company said. This was due to higher grape and wine prices, due to drought effects on the 2018 and 2019 harvests.
“However, select mainstream and premium wine brands continued commendable revenue growth despite this,” the company said.
In the rest of Africa, the company saw single-digit revenue growth during the period, with key markets including Kenya, Botswana, Zambia and Mozambique seeing double-digit volume and revenue growth.
Distell's share price was up 0.54% to R138.75 at 11.50am on Wednesday, having risen 29.19% so far in 2019.