Continued growth in Kenya, Mozambique and Nigeria, as well as strong international sales, helped local alcohol producer Distell increase revenue despite losing a third of its trading days in SA due to liquor sales bans.
In the period from July to March, the owner of the JC Le Roux, Savanna and Nederburg brands, lost 36% or 132 trading days thanks to two alcohol sales bans and periods in which weekend retail trade of alcohol was prohibited.
The government imposed bans to reduce the number of trauma patients in state hospitals, which were battling to manage high numbers of Covid-19 patients.
In a voluntary trading update, issued on Tuesday, Distell reported mid-single digit revenue and volume growth in the SA market. It is unclear if the year-on-year growth was due to stockpiling by wealthier consumers in anticipation of the alcohol bans.
Popular brands in SA included Savanna and Hunter’s ciders, and products in its spirit business, which include Richelieu and Klipdrift brandies and Three Ships whisky.
Overall group revenue was up 8.1% compared with the corresponding ninth-month period and volumes were up by 6%.
Distell said its growth was due to “the group's businesses in both African and international markets performing well by capitalising on previous investments”.
The group had double-digit increases in revenue in its Africa division, thanks to success in Kenya, Mozambique and Nigeria.
One of its most popular drinks in Nigeria is a non-alcohol sparkling wine, and in Kenya a Hunter’s cider brand and local vodka are big sellers. The group is hoping to attract more female customers in Kenya.
Distell also reported good growth in its international markets, which accounts for more than half of all sales of Amarula.
The company said wine export sales had normalised, after it lost R200m in sales in 2020 due to the first lockdown ban in which wine exports were prevented, as well as subsequent delays at the Port of Cape Town that resulted in cancelled orders.
The group’s net debt position on March 31 was R2.8bn, compared with almost the same figure in December during the third alcohol ban. It remains within its 2.75X debt covenants, a figure used by banks to measure how well a company's earnings can cover its borrowings.
The group said it remained cautious for the remaining three months of trading until its June financial year-end, due to the uncertainty of future alcohol bans in SA. The unpredictability of possible bans “inhibit the group’s ability to give accurate profit guidance for the rest of the [financial] year”, it said.
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