FOOD & BEVERAGES: Have No Beer? Try Some Cider
Recent Western Cape Business News
STELLENBOSCH-based liquor producer Distell may be precluded from entering the local beer market, but the company has done awfully well out of its cider and Ready-to-drink (RTD) brands.
While Distell’s traditional brandy and wine fare probably won’t sell quite as well as lager over the festive World Cup soccer weeks, it seems the company could well score with soccer fans that might take a liking to its Hunters, Savanna and Burchell cider ranges.
Fortunately Distell had the foresight to build cider manufacturing capacity recently when it spent nearly R300 million on bolstering production capacity.
The irony is that when Distell ventured into ciders (Hunters was launched in the late eighties) and RTDs there were many liquor sector pundits who believed initial successes were simply part of a fad that would pass.
Some commentators initially believed ciders would not be able to snaffle away market share from a dominant beer market.
But around two decades later and Distell’s CEO Jan Scannel is still reporting that cider and RTD brands are continuing their strong performance. And beer giant SABMiller, which has its own range of ciders (Redds and Sarita), must be a tad concerned at Distell’s continued successes. (Fortunately SABMiller can take some comfort in the fact that they still own around 30% of Distell.)
Distell’s latest results certainly suggest that robust sales of ciders and RTDs were instrumental in ensuring the company showed a lift in both revenues and volumes in what has been a flat market locally and abroad. Scannel reckoned that with the liquor industry characterised by rising debt levels and unemployment, cider and ready-to-drink brands (which are an affordable option) continued their strong performance.
This is in stark contrast to the company’s spirits portfolio and wine portfolio, which both showed a decline in volumes.
It seems ciders and RTDs export sales also continued to surge – albeit off a low base. Scannel said Savanna was steadily building its presence in the UK and Holland (which should be useful ahead of the Wolrd Cup) while Hunter’s strengthened its footprint in Africa.
At last count ciders and RTDs made up around 30% of Distell’s annual turnover of around R11 billion. No divisional or brand breakdown is provided by Distell in its latest interim figures, but CBN presumes that ciders and RTDs may now make up as much close to 40% of local sales.
That figure could swell markedly in year to end December 2010 if the ‘socceristos’ take a shine to the local ciders.
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