REG - Artisanal Spirits Co - Trading Update

Artisanal SpiritsAnnouncement

20/07/2022 07:00

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RNS Number : 0418T  Artisanal Spirits Company PLC (The)  20 July 2022

20 July 2022

 

The Artisanal Spirits Company plc

("The Artisanal Spirits Company", "ASC", "the Company" or "the Group")

 

Half Year Trading Update

 

Six months of further significant progress towards our ambition to double
revenue by 2024

 

The Artisanal Spirits Company (AIM: ART), the owner of The Scotch Malt Whisky
Society ("SMWS"), the leading curator and provider of premium single cask
Scotch malt whisky and other spirits for sale primarily online to a discerning
global membership, announces a trading update for the six months ended 30 June
2022.

 

Highlights

 

·      Strong trading with sales up by c.25% to almost £10m (H1 2021:
£7.9m), including a stand-out performance in China with revenue up by over
50%

 

·      SMWS membership growth (a leading indicator of future revenue
growth) increasing by around 24% to over 35,500 (30 June 2021: 28,700). This
included robust growth in European members since the launch of the new EU
route to market towards the end of FY21

 

·      Healthy supply chain situation and good stock availability across
markets

 

·      Masterton Bond facility progressing on time and on budget ahead
of operations beginning in H2-22

 

·      On track to deliver full year performance in line with market
expectations*

 

·      Confident of delivering ambition to double revenue between 2020
and 2024

 

*The Board of The Artisanal Spirits Company considers that current consensus
market revenue expectations for the year ending 31 December 2022 are £21.6m
(2021 £18.2m).

 

David Ridley, Managing Director of ASC, said:

 

"The first half of 2022 was another period of substantial progress from both a
strategic and commercial perspective. Thanks to the drive of everyone across
the business and the continued support of our loyal SMWS members around the
world, we enter the second half well positioned, and confident in our ability
to realise our ambition of doubling revenue between 2020 and 2024.

 

Group sales in the period were very strong, with revenue increasing by c.25%
to almost £10m (H1 2021: £7.9m). As previously noted, year on year growth of
this level in part reflects the comparatively weak Q1-21 sales in UK Venues
& Europe and the Group remains on course to deliver revenue growth for the
full year in line with current consensus market revenue expectations*.

 

The sales performance includes a stand-out contribution from China, where
sales were up by over 50%, reflecting the excellent membership growth
delivered in FY21 and the fantastic work by our team on the ground despite the
challenges posed by Covid lockdowns in April and May of this year.

 

SMWS membership growth, a key indicator of future sales growth, was excellent,
increasing by around 24% to over 35,500 (30 June 2021: 28,700). This global
membership growth underpins the confidence we have in our prospects and
demonstrates the growing effectiveness of our recruitment strategies.

 

This outperformance was largely attributable to the solid start to the year in
the UK as our largest market, as well as particularly strong growth in Europe,
with Brexit-related issues now addressed, and an exceptionally successful
recruitment campaign in Australia.

 

We continue to make good progress in fitting out our new multi-purpose supply
chain facility at Masterton Bond in preparation for it becoming operational in
the second half. Cask racking is now largely installed, and works are well
underway on internal firewalls and electrical/mechanical installation.
Completion of this project will be a major milestone in the development of the
Group that will have a positive impact on the level of operating margin we are
able to capture, with the benefits expected to begin flowing through as early
as FY23.

 

As mentioned in the AGM Statement, we were proud to receive an overall
Employee Engagement Index score of 81 from a recent staff survey. While
improving this aspect of the business is an ongoing process, this score is
significantly higher than reported UK and global averages, demonstrating the
commitment of our colleagues to making The Artisanal Spirits Company and its
brands successful, and enhancing the Group's reputation as a great place to
work.

 

Looking ahead, we remain cognisant of changes in the external environment, but
to date have experienced no material supply chain or production issues. As we
enter the second half, we have plenty of stock in all our markets to deliver
our plan. Beyond that, we continue to invest in growing our holding of
outstanding whisky and other spirits - we currently have almost complete
coverage to deliver growth through to the end of FY28, with substantial stock
for the following years too - providing additional comfort and a significant
inflation hedge.

 

With the momentum of the first half continuing, a robust business model and a
proven strategy, we remain confident of delivering significant sales growth
for the full year in line with market consensus revenue expectations*."

 

 

Mark Hunter, Chairman of ASC, commented:

 

"As we move into the second half of the financial year and reflect on our
first 12 months as a listed company, I am proud of what the executive team and
everyone at the business has been able to achieve.

 

We have done exactly what we said we would at IPO - with the disciplined
programme of investment undertaken and the host of operational initiatives
introduced to prepare the Group for long-term, sustainable growth, ASC is now
a bigger, stronger and smarter business than it was a year ago.

 

While the operational progress has been remarkable, it is testament to the
hard work, determination and planning of our teams that the Group has also
been so successful in continuing the trend of delivering outstanding sales
performance and driving up SMWS membership numbers at the same time;
consistently meeting or beating market consensus revenue expectations while
making excellent progress towards our 2024 revenue target.

 

In the near-term, against a backdrop of inflationary pressures and consumer
price sensitivity, we are insulated somewhat as we have stock cover at almost
100% through to end of 2028 and beyond and we offer a broad range of price
points to members. Additionally, the long term growth trajectory of the
ultra-premium category we operate in, our proven ability to grow our
passionate and enthusiastic membership with the additional stickiness and
predictability they afford the SMWS membership model, all underpin our
business model.

 

Longer-term, there is no suggestion the growth trajectory for high-end whisky
and other spirits is abating, and we have a strong presence and clear,
localised strategies in all the high value markets around the world to
capitalise on it.

 

I am grateful to all shareholders for their continued support and look forward
to providing a more detailed update at the time of our interim results in
September."

 

 

For further enquiries:

 

 The Artisanal Spirits Company plc                           via Alma PR

 David Ridley, Managing Director

 Andrew Dane, Finance Director

 Singer Capital Markets (Nominated Adviser and Sole Broker)  Tel: +44 (0) 20 7496 3000

 Sandy Fraser

 Rachel Hayes

 George Tzimas

 Asha Chotai

 Alma PR (Financial PR)                                      Tel: +44 (0)20 3405 0205

 Josh Royston                                                artisanalspirits@almapr.co.uk

 David Ison

 Lily Soares Smith

 

About The Artisanal Spirits Company

 

Artisanal Spirits Company (ASC) is based in Edinburgh. It owns The Scotch Malt
Whisky Society (SMWS) which was established in 1983 and currently has a
growing worldwide membership of over 35,000 paying subscribers.

 

Harnessing the experience of some of the most knowledgeable stewards in the
industry, SMWS provides members with inspiring experiences, content and
exclusive access to a vast and unique range of outstanding single cask Scotch
malt whiskies and other craft spirits, sourced from over 100 distilleries in
20 countries and expertly curated with diligence and care. In 2021 around 83%
of Group revenue was generated online, whilst 13% was generated through SMWS's
four UK venues.

 

Having initially proven its premium experience model in the UK, SMWS is now
able to offer its unrivalled breadth of distinguished flavours to an expanding
international market, with 69% of 2021 sales from outside the UK. SMWS has a
growing presence in the key global whisky markets including UK, China, USA and
Europe.

 

ASC is building a portfolio of premium brands that bring together some of the
world's best producers with a growing movement of discerning consumers by
curating unrivalled collections of craft spirits. In November 2021 it launched
J.G. Thomson & Co. Inspired by its namesake, which was originally a wine
and spirits merchant in Leith, Scotland, in the 1700s, J.G. Thomson is a new,
adventurous blender, creating small batch blended malt whiskies, blended grain
whiskies, rum and gin. J.G. Thomson products are available from
www.jgthomson.com (http://www.jgthomson.com) as well as a range of leading
whisky shops, bars and restaurants.

 

 

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