| Wed 18 Feb 2004, 12:28 | | Distell uncorks heady plans for international expa |
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Distell uncorks heady plans for international expansion
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Consumer Industries Editor
CAPE TOWN Wine and spirits giant Distell Group aimed to retain and grow its domestic market share and achieve a return on equity of 23% by 2007-08, international operations director Etienne Heyns said yesterday.
It also plans to become a leading New World wine firm internationally and challenge cream liqueur icon Bailey's in world markets with its Amarula cream liqueur
He was addressing an analysts' presentation on the group's interim results, released earlier in the week, which showed a 7,8% increase in headline earnings.
Group MD Jan Scannell said international sales volumes showed substantial growth in the half-year to December but revenue came under pressure from the strong rand.
About 57% of Distell Group's international revenue is eurodenominated, and in the past six months the rand appreciated by 18,1% against the euro compared with the year-ago period.
Amarula accounts for about 27% of Distell's international gross income and wines account for 55%. Sales in Africa contribute 16%.
Heyns said Distell had six focus markets for Amarula: Canada, the US, the Brazilian triangle, Germany, the UK and Spain. These markets account for 61% of its Amarula exports. The other 39% are to 81 states. Canada is currently the biggest market, at 18% of the total, followed by the Brazil and countries surrounding it, at 14%.
The trend in volume growth in the US is slower than elsewhere, but Heyns said this was because volumes surged when Distell first entered the US market a couple of years ago, and there was normally a lag before this worked its way through to the consumer level.
In wines, Distell is currently exporting about 20-million litres internationally, and the group intends to raise this to 30-million litres within two years.
The group will focus on nine markets, which account for 84% of its exports excluding Africa, for the foreseeable future: Canada, the US, Denmark, Ireland, the UK, Sweden, Germany, the Netherlands as well as Belgium.
Distell's biggest single market for wine is Germany.
The group's global volume wine brands are Nederburg, Two Oceans, Drostdy-Hof and Fleur du Cap, with Two Oceans showing the fastest volume and value trends.
Among the group's five boutique wine labels, there has been rapid growth, off a low base, in Hill & Dale, which is doing particularly well in UK retail chain Morrisons.
Heyns said although the group was approached constantly by entrepreneurs suggesting that it start to sell its flavoured alcoholic beverages Savanna and Hunter's in Europe, it had no plans to do so in the foreseeable future.
Distell's main marketing strategy in global markets is tasting promotions. At this stage it does not have the volumes or budget to maintain continuous above-theline advertising campaigns but it is working towards that goal.
In Africa, Distell has four target regions and works with local partners. In the South-East it sells in Mauritius, Mozambique and Zimbabwe. In the North-East it sells mainly in Tanzania, Uganda and Kenya. It has an investment in a facility in Tanzania that has generated a 22% return and it intends to broaden its investment profile in promising African countries.
