Distil’s full-year outturn is forecast to be in line with market expectations, following strong trading across its peak Q3 (Oct – Dec) period in what remains a highly competitive market. Despite playing up against the toughest quarterly comparative of last year, when revenue rose 71%, this Q3 delivered revenue (and volume) growth of 19%. Growth was strong across all trade channels, most notably online, albeit from a much smaller base than the On Trade and Off Trade channels. The resultant two-year quarterly growth rate is therefore the best achieved thus far this year, with Q3 revenue in the current year more than double that achieved in Oct – Dec 2015. Our full-year forecasts therefore remain unchanged.
The 19% revenue and volume growth delivered in the quarter brings the cumulative growth rates for the first nine months to 21% and 29% respectively, with marketing investment up 23%. In Q3, brand marketing increased by 11%, reflecting timing and phasing, following the 36% increase seen in H1. Growth continues to be driven by RedLeg and Blackwoods, supported by a resurgent Blavod Black Vodka, especially in Eastern Europe. These Blavod sales are licensed sales, therefore driving volume growth directly but without a commensurate benefit to the revenue line.
Distil has also announced increased listings of some 520 stores across four major UK retailers. These will come through in Spring, with the full-year benefit weighing in from the next FY19 fiscal year. These incremental listings have primarily reflected the broader market’s positive response to the new packaging, labelling and recipe of the Blackwoods 2017 Vintage Dry Gin. Domestic and export shipments of this new product formulation and brand presentation, including a proprietary new bottle, commence from this month.
With the development of Blackwoods complete, management attention will now turn to export markets, with a focus on combining the distribution of gin and spiced rum. Discussions are currently underway for this approach in the US with a shortlist of suitable distributors. Given a positive outlook for Q4 and the future benefits of incremental listings, our forecasts remain unchanged.