Distell reports profit drop as brewers fight for market share
The group reports that SA consumers are seeking value, and deep discounting in beer is shaking up SA liquor sales
Distell, the maker of Amarula, Klipdrift and Hunter’s Dry brands, said its profit margins came under pressure in its half-year to end-December, as SA consumers sought value and brewers discounted their products in a fight for market share.
The group reported a 6.6% fall in volumes for the period, with profit falling 1.2% to R1.26bn.
Volumes in SA were under particular pressure, falling 7.8%, with the group saying due to SA’s weak economy and declining disposable income for consumers, this had been expected. Deep discounting by beer competitors also hit wine sales, as consumers sought value, the company said.
“We anticipate a continuation of deep discounting by beer players creating a rebasing effect across other categories as consumers seek value at every price point in tough economic conditions,” the group said.
Distell, however, expected increased liquor sales through majro retail grocer stains, which were currently expanding.