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Distell eyes expansion in China, Latin America

The maker of wines, spirits and ciders is in the early stages of an ambitious expansion plan, to become Africa’s premier drinks brand.

Growth-hungry South African drinks maker Distell is looking at both China and Latin America for further expansion, although the African continent – which bolstered its results for the first half of the year – remains its main focus.

The company, which makes wines, spirits and ciders, is in the early stages of an ambitious expansion plan as it looks to become Africa’s premier drinks brand. It said previously that it wants to expand in one major emerging market.

CEO Richard Rushton told Reuters in a phone interview, following the announcement of the company’s half-year results on Friday, that Distell was always looking at China, although it hadn’t yet been able to find a suitable local partner there.

“We won’t enter China without a strong route-to-market partner,” he said, adding it would also like to bulk up in Latin America, where growth in other beverages beyond mainstream beer is “very interesting”.

Distell aims to double revenue growth by 2021 and is undergoing a hefty modernisation programme to get its existing business in shape.

The maker of Hunters and Savanna cider bought a 60% stake in a Chinese liquor distributor in 2012, and last year signed a distribution deal in China with a cognac firm.

Rushton said on Friday that Distell’s focus for M&A outside Africa would complement the premium brands at the centre of its international strategy, highlighting the acquisition of Scottish whisky firm Burn Stewart as particularly successful.

“We are poised,” he said, noting that the company was generating cash and had plenty of room to raise debt, although he declined to give a time frame.

African expansion, Rushton continued, was however the priority. Distell’s sales volumes declined in the six months to December 31 in both home and international markets, while across the rest of Africa, and in Kenya in particular, performance was much stronger.

That resulted in a very slight decline in sales volumes overall, although Distell managed to raise revenues, resulting in higher earnings and an increased interim dividend of 174 cents per share – up 5.5%.

Headline earnings per share – the key profit measure in South Africa – stood at 570.7 cents ($0.4058), up from 509.2 cents a year earlier.

Distell shares were up 2.5% at 0746 GMT. 

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