Stock Spirits price strategy begins to reap rewards

Stock Spirits Group reported much improved profits as management continue to turn around the drinks company, though sales growth in Poland and Czech Republic was diluted by falling sales in Italy and other markets.

The company reported stronger profits as its plans to lower prices in an effort to increase market share was starting to prove its worth.

Group revenue jumped 3.3% to €119.8m, while the company's pre-tax profit gained 23% to €15.7m, due in part to its €2.5m savings in production costs.

Chief executive Mirek Stachowicz, who was appointed last year after major shareholder and cash-and-carry customer Luis Amaral demanded a shake-up after what he saw as disappointing performance over several years, said: “This performance is a clear sign that the business has stabilised and that the initiatives put in place in 2016 are beginning to deliver tangible results including in Poland."

The overall vodka market grew by 1.4% and 1.7% in volume and value terms in the half, with changes made to the Polish
operating model allowing it to compete more effectively on price.

Polish volumes and value gained market share to 1.8% and 1.5% respectively, to a total of 26.2% and 26.9%.

As sales of vodka are declining in the global drinks market, the AIM-listed company stated they were looking at further investment in Irish whiskey, as suggested by an announcement earlier in the year that the firm would be investing €15m into Quintessential Brands Irish Whiskey.

"While our core markets remain competitive, we believe that our strategy of further developing our existing brand portfolio whilst continuing to invest in markets and categories with strong potential leaves us well placed to continue delivering long-term and sustainable growth," said Stachowicz.

Interim dividends of €2.38 will be payed out, a 4.8% increase on the same period last year after earnings per share of €0.06 were posted.

In a separate announcement, the company advised Lesley Jackson would be stepping down as its chief financial officer and would be replaced by Paul Bal, an executive at Tupperware.

In light of the announcements, shares had bumped up 6.94% to 170.25p as of 1125 BST.