Distell to unbottle potential for its cider brands in Africa
CAPE TOWN — After two major acquisitions in international cognac and whisky brands, Stellenbosch-based liquor group Distell will now be prioritising the global growth of its highly profitable cider brands.
Speaking at the company's annual meeting yesterday, outgoing MD Jan Scannell said Distell had a “tremendous opportunity” to build cider markets in emerging markets and the rest of Africa.
“Our research work into these markets shows enormous promise for cider growth.”
Distell, which dominates the local cider market through its best-selling Savanna and Hunter’s Dry brands, is already ranked as the second-biggest cider company globally (behind Heineken).
In recent years local cider sales have driven top and bottom-line growth at Distell, offsetting weaker trading conditions in the spirits and wine segments.
Demand for ciders has been so strong in recent years that Distell last year expanded both cider production capacity at its primary production plant in Paarl and bottling facilities at the secondary production site in Springs.
Distell does not provide a specific breakdown on cider sales. But a recent presentation showed its ready-to-drink (RTD) sales category in SA — which is dominated by ciders — grew 18.7% to R5.2bn in the year to end-June.
More encouraging was that RTD growth in sub-Saharan Africa markets grew 24% to R938m — comprising 41% of Distell’s total sales in that market.
Mr Scannell was also upbeat about Distell’s two recently acquired global brands, Bisquit (cognac) and Burn Stewart (whisky).
He said the Bisquit acquisition comprised essentially the brand and stock. “We had to build production facilities, and we are extremely pleased with the progress so far. We think we can compete well with other global (cognac) brands.”
Mr Scannell said prospects for Burn Stewart, which was acquired early this year, were good in the medium to long term. “The potential, without any doubt, is there.”
Distell shareholder Chris Logan of Opportune Investments commended management on their efforts to globalise the business. Mr Logan said Distell’s performance for investors was ahead of global liquor giants like SABMiller, Diageo, Pernod Ricard and Heineken.
“I can liken Distell to the All Blacks rugby team. Whether they play at home or abroad, the result is always the same.”
The annual meeting also saw Distell chairman David Nurek pay homage to the long-serving Mr Scannell, who steps down early next year. “When Jan started his tenure as MD the profit of Distell was just R90m.
“The company’s profit this
year was R1.1bn,” he said.