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S AFRICA: Distell targets cider to prop up wine

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Distell managing director Jan Scannell believes the company's cider sales will continue to thrive this year and offset a challenging European wine market.

Scannell (pictured), who leads the South African drinks group, was speaking after the company posted rising first-half sales and earnings. Distell saw revenues rise by over 16% to ZAR4.3bn in the six months to 31 December. Operating profit leapt 56% to ZAR698m.

Sales rose thanks to growing demand for Distell's spirits and cider brands and the company's ability to shrug off a tough domestic wine market.

Scannell told just-drinks yesterday (14 February) that Distell, which owns Savanna, South Africa's leading cider brand, will see its cider business go from strength to strength in 2007.

"In South Africa, cider is very much at the top end of the thirst-quench market," Scannell said. "We've seen very substantial growth in cider and there's no reason to think that won't continue in 2007."

Cider now accounts for around 25% of the company's sales. Scannell added: "It's a regional business and is driven by the South African market but we're also seeing very nice growth in the rest of Africa and into Europe."

Europe, however, will continue to present a challenge for Distell as it looks to grow its wine business outside South Africa, Scannell said.

The UK, Holland and Germany had been challenging wine markets in 2006, he noted. Focussing on the UK, Scannell said Distell, which owns wine labels including Nederburg and Durbanville Hills, had yet to secure a strong enough presence among the country's major retailers.

"The UK is quite small for us; we've been unsuccessful in breaking through and meeting the needs of the multiple grocers. South Africa is a price-driven category in the UK - that's something we're neither good at nor involved in."

Domestically, Distell saw wine sales rise 4% during the first half of the year thanks, Scannell said, to the company's brand building efforts amid an oversupply of wine particularly red varietals.

In North America, Scannell said Distell had strengthened the distribution of its wines via relationships with Brown-Forman and AV Imports.


Sectors: Beer & cider, Spirits, Wine

Companies: Distell, Brown-Forman

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