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Johannesburg - The decision of liquor firm Distell Group [JSE:DST] to diversify its core spirits and wine offerings with ciders and ready-to-drinks (RTDs) continues to pay off handsomely.
In year to end-June results that were released on Wednesday, Distell reported that cider and RTD brands - which include Savanna, Hunters, Klippies 'n Cola and Vawter - continued to flourish.
Distell CEO Jan Scannel told Fin24.com that ciders and RTDs now made up 51% of the group's annual volumes and 31% of annual sales.
He said the ciders and RTD space was becoming increasingly competitive with both larger rivals and smaller companies introducing new brands into the market.
"But we are confident that our brand offering can withstand attacks very well."
Scannel pointed out that Euromonitor had ranked Hunter's as the second-biggest cider brand worldwide and Savanna as the third.
The bright showing by the ciders and RTDs offset more staid performances from Distell's brandy, wine and spirits brands.
Scannel noted that the Amarula liqueur brand had seen an excellent year and recorded sound growth. "Amarula was recently identified as one of the world's fastest-growing spirit brands by Euromonitor International.
"It also occupies 86th position on the 2010 Impact Databank World's Top 100 Premium Spirits Brands, up from 87th place a year ago."
Overall Distell posted revenue growth of 8.7% to R11.8bn on the back of a sales volume increase of 7.3%.
Bottom line profit dropped 1.4% to R940m - a performance that Scannel deemed satisfactory in the light of the protracted recession and the impact of adverse exchange rates.
The stronger rand - especially against the euro - ground down Distell's margins on its export business, where a revenue gain of 15.2% was reduced to a 19.4% drop in operating profits.
Scannel said: "The reality is that not even the benefits derived from the ongoing improvement in operating efficiencies or the improved throughput could protect margins and profitability."
Distell's net operating margin was crimped to 11.8% from last year's 13.0%.
He said that rather than focusing on short-term market gains, Distell had maintained its long-range view of building brand equity and not discounting.
With net operational cash flows coming in at a reassuring R1bn, Distell declared a final dividend of 132 cents per share.This pegged the full-year payout at last year's level of 256c/share.
Looking ahead, Scannel said the company had been investing substantially to expand production capacity - particularly in ciders and RTDs, whisky and sparkling wine "in a bid to ensure its fitness for the future".
"By sticking to our game plan, we are preparing ourselves for an improvement in global trading whenever it does occur."
Scannel expected the trading environment to remain highly competitive both domestically and internationally.
"Nevertheless, we are confident that our business is appropriately structured with a diversified and exciting range of well-priced, quality brands in spirits, RTDs and wines to equip us to compete effectively and to continue to maximise trading opportunities."
- Fin24.com
In year to end-June results that were released on Wednesday, Distell reported that cider and RTD brands - which include Savanna, Hunters, Klippies 'n Cola and Vawter - continued to flourish.
Distell CEO Jan Scannel told Fin24.com that ciders and RTDs now made up 51% of the group's annual volumes and 31% of annual sales.
He said the ciders and RTD space was becoming increasingly competitive with both larger rivals and smaller companies introducing new brands into the market.
"But we are confident that our brand offering can withstand attacks very well."
Scannel pointed out that Euromonitor had ranked Hunter's as the second-biggest cider brand worldwide and Savanna as the third.
The bright showing by the ciders and RTDs offset more staid performances from Distell's brandy, wine and spirits brands.
Scannel noted that the Amarula liqueur brand had seen an excellent year and recorded sound growth. "Amarula was recently identified as one of the world's fastest-growing spirit brands by Euromonitor International.
"It also occupies 86th position on the 2010 Impact Databank World's Top 100 Premium Spirits Brands, up from 87th place a year ago."
Overall Distell posted revenue growth of 8.7% to R11.8bn on the back of a sales volume increase of 7.3%.
Bottom line profit dropped 1.4% to R940m - a performance that Scannel deemed satisfactory in the light of the protracted recession and the impact of adverse exchange rates.
The stronger rand - especially against the euro - ground down Distell's margins on its export business, where a revenue gain of 15.2% was reduced to a 19.4% drop in operating profits.
Scannel said: "The reality is that not even the benefits derived from the ongoing improvement in operating efficiencies or the improved throughput could protect margins and profitability."
Distell's net operating margin was crimped to 11.8% from last year's 13.0%.
He said that rather than focusing on short-term market gains, Distell had maintained its long-range view of building brand equity and not discounting.
With net operational cash flows coming in at a reassuring R1bn, Distell declared a final dividend of 132 cents per share.This pegged the full-year payout at last year's level of 256c/share.
Looking ahead, Scannel said the company had been investing substantially to expand production capacity - particularly in ciders and RTDs, whisky and sparkling wine "in a bid to ensure its fitness for the future".
"By sticking to our game plan, we are preparing ourselves for an improvement in global trading whenever it does occur."
Scannel expected the trading environment to remain highly competitive both domestically and internationally.
"Nevertheless, we are confident that our business is appropriately structured with a diversified and exciting range of well-priced, quality brands in spirits, RTDs and wines to equip us to compete effectively and to continue to maximise trading opportunities."
- Fin24.com
