Distell introduces Savanna cider in cans due to glass shortage

SOUTH AFRICA – Distell, Africa’s leading cider producer has launched a limited edition of can packaging for its Savanna brand, following glass shortage.

The cider has only been sold in bottles since its launch in 1996, but Distell, which also produces other brands like Hunter’s and Klipdrift, has been struggling with a “severe” glass shortage in South Africa, which forced it to consider cans, reports Fin24.

Glass supplies have been a problem in South African since last year, when large glass manufacturers had to shut their furnaces during the peak of hard lockdown and amid alcohol sales bans.

For example, Consol lost more than 100 000 tons, or 12% of its total output.

Distell says global shipping disruptions have compounded shortages in glass, aluminium and corks, which is hitting its production.

A sharp recovery in demand for products across the world has put strain on the world’s supply chains, with a shortage of shipping containers and warehouse capacity in many countries adding to delays.

Meanwhile, there is congestion at ports, and in some Western countries, truck drivers are in short supply.

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In China, a major centre of international manufacturing, ports and factories were closed after surges in new Covid-19 cases towards the end of last year.

Distell said strong demand for Savanna has now outstripped the supply of glass bottles, which meant that the company launched a limited edition can for the beverage.

Distell reports revenue growth

The drinks maker has reported an improved performance in the six months ended December 2021, despite a half-year period marked by Covid-19, the July unrest, rising commodity cost pressures and global supply chain disruptions.

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The group’s revenue increased by 15.8% to R17.8 billion (US$1.15 billion) on 12.1% higher volumes, which is more than 20% higher than pre-pandemic levels.

Domestic revenues increased by 22.9%, with volumes up by 15.4%. with all three categories recording double-digit revenue growth, especially driven by exceptional premium cider and ready-to-drink (RTD) growth, led by Savanna.

Multiple spirits brands performed commendably with stand-out performances recorded by key gin and vodka brands.

The wine category benefitted from growth in mainstream and sparkling wine. Our e-commerce and digital sales channels continue to show excellent growth alongside key innovation roll-out and stepped-up investment into key brands.

In African markets, outside South Africa, revenue increased by 0.9% on 6.5% higher sales volumes. Volumes in BLNE countries (Botswana, Lesotho, Namibia and Eswatini) declined by 1.4% as Botswana lost almost a third of its trading period due to extended restrictions, and stock supply issues in Namibia.

Focus markets on the continent, outside the Southern African Customs Union, grew revenue by 5.3%.

This was largely driven by Mozambique, Zambia and Tanzania as a result of our accelerated route-to-market (RTM) investments.

Kenya posted a resilient performance, particularly over the peak season, despite prolonged domestic channel closures due to government-imposed restrictions for the majority of the trading period.

Excellent growth was achieved by key cider and RTD brands, growing volumes by 24,8%.

The Africa region contributed 65.3% to foreign revenue, with its contribution to Group revenue comprising 15.9% in the current period.

Revenue in international markets outside Africa declined by 3,8% alongside an expected volume decline of 9.5%.

This is attributable to one of its largest revenue contributing regions, Taiwan, experiencing COVID-19 related on-consumption channel closures for half of the trading period, the cessation of the sales of less profitable wine brands and the exit of the RTD business in various regions.

Meanwhile, premium spirits continue to perform strongly across key markets, particularly with single malt brands growing over 20% in revenue, alongside Amarula growth in focus markets.

Operating costs increased by 16.7% driven by the current abnormal inflationary increase in overall costs of goods sold, but we managed to keep it in line with overall revenue growth and maintained profit margins.

Sales and marketing costs rose by 10.9%, as we normalised marketing activities following the lifting of various restrictions to continue investments behind brands. Administration and other costs increased by R343.2 million (US$22.22m) to R983.2 million (US$63.66m).

Overall, its half year rose by 17.5%, growing headline earnings per share (Heps) to 718.2 cents in the six months ended 30 December, compared with Heps of 612 cents a year earlier.

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