'Rampant' demand for Savanna boosts Distell

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Photo: Distell
Photo: Distell

In a trading update for the six months to end-December, Distell's revenue in South Africa grew by more than 20% thanks to "exceptional" growth in sales of its cider brands Savanna and Hunter’s and ready-to-drink products, including Bernini, Esprit and Klipdrift & Cola.

But "rampant” demand for Savanna and its core spirits brands has worsened glass shortages in South Africa, Distell added.

The strong revenue growth came despite alcohol sales bans, which caused the loss of 25 trading days in South Africa over the past six months, compared to 38 in the same period in the previous year.

Distell reports that while the civil unrest in July caused R100 million in damage to one of its distribution centres, insurance claims have covered the losses and operations were "normalised" within six weeks.

Across the group, Distell’s revenue increased by around 15%, with sales in the rest of Africa seeing mid-single-digit revenue growth despite lockdowns and sales restrictions. Botswana lost almost a third of its trading period due to these restrictions, and Distell was also hit by stock supply issues in Namibia.

Its international business recorded a single-digit revenue decline as lockdown-related restrictions hit sales in Taiwan, one of its largest revenue earners.

South African port disruptions amid the civil unrest and a cyber attack on Transnet also had a "material adverse effect" on wine exports.

Distell says its overall net debt position is expected to be under R1 billion, aided by strong cash generation and trade receivables collection ahead of expectations during the festive season.

Its share price was flat at R169.23 on Thursday morning.

Heineken has made a €2.2 billion (R38.5 billion) offer for Distell.

Its offer will split Distell into two businesses. Distell's cider and other ready-to-drink beverages as well as spirits and wine brands will form a new business ("Newco"), which will be combined with Heineken's southern African business and the Dutch group's interest in Namibia Breweries Limited (NBL), which owns Windhoek and Tafel.

The deal is expected to be concluded this year.

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