A ONE-off excise duty relating to a reclassification of wine aperitifs offset the benefits of strong volume growth experienced by Distell Group in the year ended June, managing director Jan Scannell said on Wednesday.
However, strong growth from its spirits brand Amarula and Hunter’s ciders helped the company grow volumes in South Africa by 9.6% and revenue 13.8% to R10.6bn.
Distell outpaced the rate of growth achieved in the national retail alcoholic beverage sector in the period, Mr Scannell said.
"The consumer has come under pressure and has been downtrading, which is reflected in the decline in some of the more expensive categories," he said.
A one-off extraordinary excise duty provision of R297.8m, however, took the shine off the company’s overall revenue growth of 15%.
On a normalised basis, headline earnings increased 23.1% and operating profit 19% compared to the prior year. Including the extraordinary item arising from the reclassification by the South African Revenue Service of wine aperitifs, headline earnings rose 0.8% to R969.9m while operating profit declined 1.7% to R1.41bn, the company said.
International sales volumes increased by 10.7%, with revenue up 21.1% to R3.4bn.
"Sub-Saharan African markets, in particular, delivered another year of strong growth, contributing 60.8% to foreign revenue," the company said.
Internationally, all categories showed strong growth with spirits and wine sales volumes growing by 13% and 6% respectively, while ready-to-drink volumes rose by 19%.
Distell’s wine sales were still very dependent on the UK and Western Europe, both of which had been severely affected by the economic downturn, the company said, but volume growth of 6%, and revenue growth of 15%, was achieved.
Contrary to the view of some wine producers, the UK could still offer good growth, Mr Scannell said.
He said the uncertainty of the global macroeconomic environment had made it difficult to anticipate trends in demand, and consumer spending was expected to remain modest both domestically and internationally.
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