Distell toasts international sales increase

27 August, 2009

The Stellenbosch wine, cider and spirits producer has reported solid results despite currency issues and the global consumer downturn.

Distell, the South African drinks producer, has seen a 37% leap in its international business according to the company’s results for the year to June 30.

The Stellenbosch-based business says its wine exports are outpacing those of South Africa generally – and managing director Jan Scannell has even warned the country could be facing future wine shortages as it struggles to cope with international demand.

Scannell said Distell continued to account for 20% of domestic sales but was seeing strong growth in foreign markets, with “exceptional growth” coming from the African continent. The company’s international wine sales rose 27%.

Distell made its first international acquisition in April with the purchase of Bisquit Cognac and Scannell said the priority was to expand the brand’s presence in Asia, North America, Eastern Europe and Africa.

Headline earnings grew 1.2% to R953.5 million. Scannell said: “Benefits derived from improved throughput and better operating efficiencies were negated by the substantial increases we experienced in material and distribution costs, as well as by the incremental costs of expanding sales and marketing representation in key markets.”

He said the group’s performance had also been affected by adverse exchange rates. “Towards the close of the financial year the rand strengthened substantially against most major currencies, giving rise to foreign currency translation losses of R46.6 million at year end, compared with last year’s gain of R57.3 million,” he said.

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