TIDMDIS
RNS Number : 2426S
Distil PLC
13 July 2022
Distil PLC
Trading update
Business remodels for accelerated growth
Distil plc (AIM:DIS), owner of premium drinks brands RedLeg
Spiced Rum, Blackwoods Gin and Vodka, TRØVE Botanical Vodka, Blavod
Black Vodka and Diva Vodka, provides an update on trading for the
first quarter of its current financial year.
Unaudited year-on-year first quarter (April - June 2022)
results:
-- Volumes decreased 79% and revenues decreased 81% from GBP624k to GBP120k
o Reported figures due to one-off impact of business remodel
resulting in stock being removed from current distributor as
business sets-up for accelerated growth
-- Export sales increased 84% year-on-year
o Expansion of existing and opening of new markets
-- Marketing investment increased 67% year-on-year
o Positive initial results following launch of first TV campaign
for RedLeg Spiced Rum
Don Goulding, Executive Chairman, said:
"Reported year-on-year revenue and volume declines for the first
quarter largely reflect the recently announced remodelling of our
UK business (see RNS dated 6 July 2022), which will see us handling
all sales and marketing to our major UK retail customers directly
rather than through a third-party distributor. Whilst this major
move will result in a one-off impact to full year revenue in the
current financial year, we expect the change to our business model
to yield significant revenue upside from 2023 financial year
onwards.
The UK is by far our largest market and stock cover held by our
outgoing distributor to service major retailers is significant.
This inventory is being managed down and removed from the
distributor supply chain as we prepare for the shift to direct
sales at the end of Q2. We anticipate this one-off reduction in
inventories will result in a c.GBP580k adverse impact to our
reported UK sales during the first half of the current financial
year ending 31 March 2023. However, these changes to distributor
stock cover have no impact on sales at the consumer level.
The Board expects that the short-term impact of this major
change on UK sales will be offset by greater benefits next year and
into the future. The appointment of a Commercial Director is a
pivotal step in the business remodel as it will enable us to take
direct control of servicing our major customers, which will in turn
allow us to take advantage of effective promotional activity,
better manage market fluctuations, and develop business-building
plans together with our key customers to drive visibility and brand
growth while simultaneously reducing costs.
The overall UK spirits market in the first half of this calendar
year has been challenging as it continues to recover from the
impact of Covid, showing a small decline in the off-trade as
consumer drinking habits adjust to being back in hospitality which
has grown off a low comparison during lockdown.
The on-trade continues to show strong signs of recovery as
consumers return to hospitality, and as confidence rebuilds, we are
positioned to take advantage of new listing opportunities. This
quarter we have secured increased distribution with a major UK
on-trade chain, and we are confident that working together with
specialist on-trade distributor, Marussia Beverages and its
award-winning team, we will continue to build on this success in
this financial year.
Export sales continued to grow in the first quarter, up 84%
year-on-year. Our international markets have largely experienced a
quicker bounce-back from Covid restrictions, and we have been
working diligently with existing markets to ensure stock levels are
managed, as well as seeking out additional growth opportunities
within new markets. This quarter has seen the team secure an
additional listing for RedLeg Tropical in Australia, and new
distribution agreements in Germany and The Baltics. Our newly
appointed Commercial Director will be instrumental in accelerating
growth of export not only through opening new markets, but also by
fostering key existing markets to create joint growth plans for our
brands.
The start of the current financial year saw us increase the
front-line retail price of our brands in order to manage our
margins in light of cost of goods increases caused by the impacts
of Covid, Brexit, Eastern Europe conflict and the associated impact
on price inflation. This is the first time we have advanced retail
prices since 2017, and our brands still offer great value within
their respective categories. Cost management and containment will
remain a key priority this year while ensuring we maintain the
premium product quality that our brands have become known for.
The quarter also saw marketing investment increase 67%,
predominantly attributed to the launch of the first TV advertising
campaign for RedLeg Spiced Rum in collaboration with ITV
Adventures. The campaign, valued at over GBP500,000, ran on linear
channels in targeted regions and nationally on-demand, was named Ad
of the Week in leading trade publication, The Grocer, and has
already begun to deliver positive results for the brand at consumer
level. We are now working together with our strategic partners and
customers to continue building on this success.
As with business change there will be initial non-recurring
impacts of remodelling our business strategy however the Board and
the wider team are excited by the opportunities that the improved
business affords us, and we look forward to driving business growth
and value for customers, shareholders, and stakeholders."
For further information:
Distil PLC
Don Goulding, Executive Chairman Tel +44 203 405 0475
Shaun Claydon, Finance Director
---------------------
SPARK Advisory Partners Limited
(NOMAD
---------------------
Neil Baldwin Tel +44 20 3368 3550
Mark Brady
---------------------
Turner Pope Investments (TPI)
Ltd (Broker)
---------------------
Andy Thacker / James Pope Tel +44 20 3657 0050
---------------------
About Distil
Distil Plc is quoted on the AIM market of the London Stock
Exchange. It owns drinks brands in a number of sectors of the
alcoholic drinks market. These include premium spiced rum, vodka,
gin, vodka vanilla cream liqueur and are called RedLeg Spiced Rum.
Blackwoods Vintage Gin, Blackwoods Vodka, TRØVE Botanical Vodkas,
Blavod Original Black Vodka and Diva Vodka.
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END
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July 13, 2022 02:00 ET (06:00 GMT)
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