Distil PLC (LON:DIS) suffered a hangover on Thursday after difficulties in the UK’s gin market caused it to downgrade its full-year revenue forecasts.
The AIM-listed maker of Blackwood’s gin and Blavod vodka said it had faced “challenges” in its core markets during the first six months of its current year, particularly the UK market for unflavoured gin where sales in the period had been “disappointing” due to a decline in volumes over the summer months.
READ: Gin market becoming overcrowded as new distilleries pile in says Distil
While Distil said it had increased promotions for its brands ahead of the Christmas trading period, the possibility of “continued softening” of the unflavoured gin segment meant it expected full-year revenues to be “below current market forecasts”, however, due to efficiencies and tight cost controls operating profit was predicted to remain in line.
The firm had previously warned that the gin market was becoming overcrowded in its final results in June when it said it was having to increase promotional spending to match price cuts by rivals.
The downbeat forecast accompanied a dismal set of figures for the six months ended 30 September, where the group swung to a pre-tax loss from continuing operations of £1,000 from a profit of £101,000 in 2018. Revenues, meanwhile, tumbled to £824,000 from £1.2mln.
A silver lining was the company’s spiced rum segment, which was expected to see “further growth” going forward as it prepared to launch its RedLeg Caramelised Pineapple Spiced Rum in retail stores next month.
Sales of Blavod had also remained in line for the period, with volumes tracking ahead of the overall vodka market.
Don Goulding, Distil’s executive chairman, said despite the headwinds facing the gin market the group was “confident” that its investment and marketing strategies and new product innovation would deliver growth in the medium term.
However, this did little to lift the spirits of shareholders as the stock plunged 34.1% to 0.6p in early trading.