UK-based spirits group Distil has started a strategic review of the business.
In a trading update filed on the London Stock Exchange this morning (13 March), the Redleg Spiced Rum distiller said it had begun a “review of strategic options to stabilise the business and drive long-term shareholder value”.
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It added: “We are currently exploring all aspects of cost management to ensure we manage both external inflationary pressures and reduce discretionary expenditure wherever possible.”
Considerations in the process could involve “exit options for non-core brands” and the “potential sale of unused intellectual property”, as well as looking for “near-term funding”, Distil said.
The Blackwoods gin owner added that it was “not actively considering an offer for the company”.
Distil’s strategic review announcement was issued alongside a trading update for its fourth-quarter and full-year results.
Revenues for the 12 months ending 31 March 2025 are projected to decline 31% to £1.1m ($1.4m), along with a 32% drop in volumes.
The Blavod vodka distiller expects more positive results for its fourth quarter, with revenue forecast to grow 34% to £498,000.
It is also anticipating 30% growth in volumes for the quarter, as a result of “key customers entering the period carrying lower inventories versus previous year”.
As well as the strategic review, Distil said it would be “focused on further cost cutting” in “overheads, advertising and promotional spend” as it looked to make up for budgeted losses.
December in particular was a “disappointing” month for the business, “with current losses expected to continue despite 50% revenue growth budgeted in FY25/26”.
It noted that an “aggressive” cost-reduction plan would help to offset some of its losses, but stressed “a cash requirement” would be needed in “the first half of the next financial year to build stock cover to allow for activation of the stabilisation plan, which will be addressed through the strategic review”.
Don Goulding, executive chairman of Distil, said: “Like many businesses in our industry, we are acutely feeling the effects of a challenging market. Layers of economic pressures on both the trade and consumers over recent years, including extraordinary fuel prices driving up production and logistics costs, significant duty increases, and exceptional levels of inflation, have changed the market, and with ongoing geo-political uncertainty, recovery has been slower than anticipated.
“In order to stabilise the business and deliver shareholder value, we are taking aggressive cost-cutting measures, as well as undertaking a review of strategic options. We are committed to finding the best solution for the business and to open and ongoing communication with our shareholders.”
In its trading update, Distil said it expected the company would see a return to growth in the next three years, supported by its distribution deal with Global Brands, inked earlier this year.
Since 14 February, Global Brands had been granted full distribution rights for Distil’s portfolio in the UK and Ireland.
Global Brands was appointed the distributor for Distil’s UK grocery, cash-and-carry and convenience channels in March last year, according to a stock exchange filing from Distil.
The London-headquartered company said that exports would also be a key focus in the next three years, and pointed to entering new markets such as the US and “key emerging markets for core brands”.
