LONDON - Distil PLC (AIM: DIS), the company behind RedLeg Spiced Rum, Blackwoods Gin and Vodka, and Blavod Black Vodka, has reported a significant drop in revenue and volume in its third-quarter earnings. The unaudited results for the quarter ending December 2024 showed a 59% decline in revenues, down to £233k from £571k in the same period the previous year. The firm also experienced a 56% decrease in volumes and a 6 percentage point reduction in gross margins to 42%.
Executive Chairman Don Goulding attributed the decline to the challenging market conditions in the UK spirits industry, which has been on a downward trend. The company's sales have mirrored this downturn, with Q3 sales falling at a rate consistent with earlier interim reports. Distil's major customers have taken a more cautious approach, reducing stock cover by an additional 20%, leading to a decrease in large orders compared to the previous year.
The retail environment has also been tough for Distil, with consumers' spending stretched and a preference for own label products and discounted items. The UK on-trade market, which includes pubs and restaurants, has seen a 4% year-on-year drop in spirits retail value in the week leading up to December 28, as customers opt for perceived better value drinks like beer and cider.
In response, Distil is set to move its full UK distribution to Global Brands, a partner since 2019 known for the RedLeg ready-to-drink can and a portfolio that includes VK, Hooch, and Franklin & Sons. This partnership is expected to leverage Global Brands' larger sales force and logistics capabilities to help accelerate Distil's brand growth.
Despite the current market challenges, Distil is also focusing on growth opportunities abroad and is working with existing customers in key markets, as well as exploring new markets for export. The company acknowledges the medium-term macro-outlook remains challenging, but remains confident in the potential of the extended partnership with Global Brands to position its brands favorably in the market.
This update is based on a press release issued by Distil PLC.
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