Brandy sales also
did well, with volume growth of 14%.

Distell says
domestic market revenue increased by 8.2% in the six months to December and
sales volumes rose by 2.9%, despite a suppressed consumer environment and
sustained competitor activity.

Its spirits and
ready-to-drink portfolios delivered strong revenue and volume growth while the
wine portfolio grew revenue 4.5% due as consumers traded up to its premium wine
from mainstream brands.

Mainstream wine
growth was muted by increased competition and a “trading up” trend, said
Distell CEO, Richard Rushton. He said Distell’s premium wines — including
Nederburg, Durbanville Hills and Fleur du Cap — showed strong growth.

Rushton reported
that Distell’s premium RTD (ready-to-drink) range of beverages continued to
perform well with grape-based brand Bernini managing a 41% volume gain and a
55% surge in value.

“Bernini is SA’s
fastest growing grape RTD,” he noted.

On global markets,
Rushton said that liqueur Amarula was growing in its top five markets, and in
addition there was market share growth in 17 international markets for South
African bottled export wines.

Outside of South
Africa, the inclusion of KWA Holdings East Africa in Kenya to its
Rest-of-Africa business contributed to revenue growth of 18.5% as sales volumes
rose 6.6%. It says focus markets on the continent including Namibia, Botswana,
Kenya, Zambia and Zimbabwe all recorded strong growth, but trading conditions
were challenging in Mozambique and Nigeria.

International
markets outside of Africa grew volumes by 6.7% and revenue by 9.4% as increased
local investment in the UK was impacted by the effects of a stronger rand and a
less favourable sales mix. Travel Retail grew sales by 43.2%.

Total revenue for
the period rose 9.3% to R13.4-billion and operating profit jumped 15% to
R1.8-billion.

Normalised
operating profit increased by 6.5% and was up 4.4% excluding pro forma foreign
currency translation movements. Headline earnings, including its discontinued
operations, fell by 5.1% to R1.1 billion and headline earnings per share on the
same basis were down 5.1% at 509.2c.

The group was
negatively affected by one-off losses and impairments of R85.9-million
following a sachet ban and excise duty dispute which impacted the performance
of Tanzania Distilleries Limited, in which it holds a 35% interest. Excluding
that ad the currency conversion movements, headline earnings were 3.2% higher.
It’s maintained its dividend at 165c per share.

It says while the
drought in the Western Cape poses a real risk to the supply of grapes and wine
in the medium term, it has secured enough supply for the current cycle and has
invested R22-million in waste-water treatment and reuse programmes to mitigate
against further supply risk.

It says a
restructuring, which will result in a new entity, Distell Group Holdings, being
listed on the JSE, should be completed in April. The restructuring is aimed at
simplifying its multi-tiered ownership structure.

Source: Drink Stuff SA