Spirits trade has tough year in 2023 according to AIM-listed Distil
Inflation, cost-of-living pressures and a steep hike in alcohol duty contributed to a difficult environment for AIM-listed Distil last year, its latest financial results show.
Don Goulding, chair of the firm said: “Across the total UK spirits trade, volumes declined as consumers, facing continued spending pressures, cut back on consumption or switched to categories that were perceived to be less expensive, such as beer and cider”.
“Whilst the headline rate of inflation continues to fall, prices within the UK are still increasing, particularly within spirits which, following the largest duty increase in almost 50 years, implemented in August 2023, is twice the headline rate,” he added.
Goulding noted that the on-trade, which includes restaurants, pubs, and bars, continues to contract.
Around 16,000 outlets have closed since March 2020 due to higher costs and changing patterns of demand.
Despite the difficult environment, turnover at the firm increased 15 per cent year-on-year to £1.5m, with Goulding pointing to a “continued expansion” of its brands in the UK on-trade.
Distil is the owner of premium drinks RedLeg Spiced Rum, Blackwoods Gin and Vodka, Blavod Black Vodka, TRØVE Botanical Spirit and Diva Vodka.
Exports also performed well, growing seven per cent in volume and 21 per cent in value. The firm put this down to growing interest in Blackwoods Gin & Vodka.
Nevertheless, the firm’s loss before tax widened to £942,000 from £654,000 last year largely due to inflationary pressures. Margins declined in the year to 48 per cent from 52 per cent previously, primarily due to the increasing cost of raw materials.
“Management of operations and cost of goods has remained challenging this year as price increases on key packaging elements continue to flow through due to inflationary pressure,” Distil said.
Goulding said that he remained confident in Distil’s brands despite continued economic pressures and said the firm would continue to find efficiencies across the supply chain.