S AFRICA: Distell shrugs off local wine pressures

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South African drinks group Distell today (14 February) posted a jump in first half sales and earnings as it brushed off a tough domestic wine market.

Distell, which owns wine labels including Nederburg and Durbanville Hills, saw revenues rise by over 16% to ZAR4.3bn (US$595m) in the six months to 31 December. Operating profit leapt 56% to ZAR698m, the company said.

Managing director Jan Scannell said the company had delivered a "sound performance" at home and abroad. Sales volumes in South Africa rose almost 12% thanks to growth from its spirits, RTD and wine divisions.

Scannell labelled the 4% rise in wine sales a "remarkable achievement" in a local wine industry hampered by a global wine glut.

He said: "Those who have yielded to discounting pressures are, in many instances, floundering. However, producers who have been able to adopt a longer-term strategy in preserving the integrity of their trademarks are holding out better."

Sales volumes outside Africa inched up 3.3%, buoyed by the robust growth of Distell's Amarula cream liqueur. Wine sales volumes slipped by almost 4% but Scannell stressed Distell's exports are trading ahead of the South African category as a whole.

He said: "Our focus is exclusively on bottled wines, whereas the local industry has been moving increasingly into bulk exports as a way of curtailing supply chain costs. "What is pleasing is that, on a global basis, profits from wine showed solid growth in spite of difficult market circumstances."

Sectors: Beer & cider, Spirits, Wine

Companies: Distell

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