David Nurek Chairman. Distell is A global company of South African essence Innovative, with a clear...
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![Page 1: David Nurek Chairman. Distell is A global company of South African essence Innovative, with a clear focus on key brands Lean, flexible and responsive.](https://reader030.fdocuments.in/reader030/viewer/2022032702/56649cf45503460f949c1b82/html5/thumbnails/1.jpg)
David NurekChairman
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Distell is
• A global company of South African essence
• Innovative, with a clear focus on key brands
• Lean, flexible and responsive to consumer needs
• A people company where every stakeholder is important
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Corporate governance
• Board committed to principles of good governance
• Highest standards of integrity, fairness and social responsibility
• Formal critical evaluation was conducted of our compliance with King II and JSE Securities Exchange requirements
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Characteristics of South African macro environment in 2001/2002
• Softening Rand– Negative impact– Positive impact
• Increased integration with the world economy
• Volatility
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US$/Rand exchange rate for the year to June 2002
0.122040.12052
0.11588
0.10813
0.08699
0.10813
0.08638
0.08737
0.09881
0.09862
0.09053
0.08720
Average per month
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PPI
135.6
Excise on spirits
128.6
Ace 5kg Maize
162.0
CPI, PPI and food pricesindexed to JJ 1999
Sou
rce: A
C N
ielse
ns, Diste
ll
CPI
122.5
Klipdrift (inbond)
116.8
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Effects in 2002
• Windfall income from exports – Maintained prices in foreign currency
• Raw materials scarcity - imports to sustain markets
• Increased costs of inputs– Packaging– International structures & marketing
Imperative to increase exports to reduce risk
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Final household disposable incomeS
ource
: Re
serve
Ba
nk, AC
Nie
lsen
s
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Non - durable goodsFinal household consumption expenditure (1995 prices)
Sou
rce: R
ese
rve B
ank, A
C N
ielse
ns
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Local market trendsS
ource
: Nie
lsens 1
2 m
on
ths to JJ
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Financial highlights
• Merger integration process completed• Increase of 6,7% in sales revenue• 24,3% growth in trading income• Headline earnings up 33,6%• Total dividends increased 32,1%
In an environment of increasing domestic volatility it is essential to be an effective international player
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Etienne HeynsDirector - International
Operations
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• World class service
• Wines
• Africa
• Amarula
Strategic approach
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Amarula strategyAspirations
• To become the preferred cream liqueur in the world
Strategy • Premium positioning with strong
support– Premium pricing (compared to
Baileys)– ‘Big distribution’ channels– Strong marketing support– Financial commitment
• Strong distribution partners– Brown Forman (USA)– First Drinks (UK)– Peter Mielzynski Agencies (Canada)– Aurora (Brazil)– Underberg (Germany)– Marie Brizard (Spain)
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Amarula - achievements & prospects
• Strong growth: USA, Canada • Slower yet good growth: Germany,
Spain• Consolidate: Brazilian triangle• UK - turnaround plans in place
Amarula already biggest contributor to marginal income of Distell - set to grow
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Africa - strategy
• BLNS - use established structures
• Substantial direct investment in key markets• Limited structures in markets with good potential but risk elements
• Develop efficient distribution for further markets
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Africa - achievements & prospects
• Other than BLNS, performance disappointing
in 2002• Plan
– Tailored marketing approach– Flexible distribution structure– Aggressive sales approach– Adaptable and tailored production configuration– Optimal share investment
• Expected return - 3 fold increase
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Wine strategy
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Wines - achievements• New organisation - fully staffed (including
UK key account manager, value chain analyst)
• Customer segmentation completed• International logistics in place• New APO forecasting in place• UK strategy in place - new listings• USA pilot project• Germany, Norway - new listings• Major new product developments
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World class service
• Distell must deliver– very large volumes– consistent quality– at target cost– on short notice– always on time
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World class service
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Jan ScannellManaging Director
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New way of working - DMOS
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Our employees
• Loyal - 45% of staff over 10 years’ service
• Average age of 38• Recruitment of new talent
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Employment equity
• Plan in place• Management measured on
attainment of goals
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Corporate social investmentMust align with corporate objectives• Arts & Culture
– Distell Foundation, Oude Libertas Amphitheatre, Arts festivals
• Environment – waste reduction, effluent, recycling, IPW
• Transformation– Papkuilsfontein, Phalaborwa, Mandela
• Health– ARA, Advertising code
• Combating crime
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The merger
• Forecast merger savings will yield 36% on investment of R484 m - 96% has been realised to date
• With the merger embedded, we will now build our brands
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We will focus on 3 themes in 2002/03
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Risks
• Competition authorities• Gordon’s Gin• Liquor Act• Advertising• Illegal products
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Progress in respect of 5 year objectives
International revenue as % of turnover
Target 2003 - 20%
TargetActual
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Progress in respect of 5 year objectives
Return on equity
Target 2003 - 16.5%
TargetActual
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Thank youQuestions?
www.distell.co.za