FY15 has seen Distil complete its strategic transition from a distributor of third party brands to a value-added developer of premium spirit brands, including its name change to Distil from Blavod previously. Distil has reported a welcome 26% reduction of its operating losses, held back by circumstances beyond its control. First, unexpected delays in acquiring the necessary US regulatory approvals have prevented the group from selling its core brands into that key and substantial market. And second, macro-economic conditions in Eastern Europe, and in Russia and Ukraine in particular, have resulted in a large volume decline in the sale of its black vodka brand, Blavod. These two factors have overshadowed strong progress elsewhere of its core brands, especially in the UK, where several important new listings have been gained.
Prelims results: While owned brands saw a modest 9% sales decline for the reasons outlined above, gross profit rose 20% to just over £400K, with contribution (after advertising & promotional costs) almost doubling to £258K. Combined with some good progress on cost management and the interest charge, Distil delivered a 26% reduction in its reported pre-tax loss to £289K (from £392K). The balance sheet was bolstered by a further placing, raising £587K gross in January 2015, with year-end cash standing at £511K.
US update: Distil has appointed two distributors for its core brands in the US. The Winebow Group will be responsible for the Blackwoods and RedLeg brands, the other, Kanetz Trading, for the Blavod brand. Blackwoods gins and Blavod have been granted full TTB approval, with full approval expected for RedLeg and Blackwoods vodka in H1.
Listings successes: In the UK RedLeg sales rose 84%, gaining listings with a leading national wholesaler and a leading UK pub chain. After the year end, Distil announced a potential break-through listing for RedLeg with a major supermarket chain. Blackwoods also made several important listing gains across its gin and vodka range.
Monthly break-even target: The group was unable to achieve this goal in FY15, but this remains the group’s “primary focus” in the short– term as a key stepping stone to longer-term profitability.