Distil PLC Q3 Update: Consumer Sales Rise 36% Despite Revenue Drop and US Approval for Blavod

Distil PLC Q3 Trading Update: Sell-in Down, Sell-through Up, and US Gate Opens for Blavod

Distil’s third quarter (October to December 2025) is a tale of two markets: softer distributor orders, but healthier consumer demand, especially for RedLeg Spiced Rum. Revenues fell 26% to £173k, yet shopper-level volumes climbed, margins held steady, and there are early signs of traction in exports. The US also opened its doors to Blavod Black Vodka after securing key regulatory approvals.

Results are unaudited and cover the three months to 31 December 2025.

Headline numbers you need to know

Metric (Q3 FY26)	Result	Prior Period	Change
Revenue	£173k	£233k	-26%
Gross margin	42%	42%	Flat
Volumes into distributors	Not disclosed	Not disclosed	-39%
Consumer-level volumes	Not disclosed	Not disclosed	+36%

Additional colour: RedLeg grocery sales to end consumers were up 36% year-on-year in Q3 and +28% in the four weeks to 28 December, against a 4.1% decline in total take-home alcohol spending in the same period (Worldpanel).

Why revenue fell while shoppers bought more

The main driver is inventory. Distributors built stock for Christmas in Q2, then ran lean through Q3 as retailers tightened stock cover. That means Distil’s “sell-in” to the trade dropped 39%, even though “sell-out” to consumers rose 36%. It’s a classic timing mismatch.

My take: this isn’t a demand problem at brand level; it’s a channel inventory cycle. If consumer momentum holds, restocking could follow – timing not disclosed and never guaranteed, but the mechanics are clear.

RedLeg’s strong quarter – promotion and new pack doing the work

RedLeg’s performance in grocery was “buoyant”, supported by competitive price promotion and the refreshed RedLeg pack that hit shelves mid-December. A pack refresh often lifts rate of sale by improving shelf standout, which seems to be happening here.

The caveat is reliance on promotions. That’s not unusual in spirits retail, but it can pressure margin if overused. For now, gross margin at group level held flat at 42%, which is a quiet positive in a tough environment.

On-trade: modest value growth, cost pressures biting

In bars and restaurants, value sales increased 1.9%. However, prices in the on-trade have been pushed up by last year’s duty rise, broader inflation across the supply chain, and higher staffing costs. A Barclays consumer report cited by Distil notes 39% of consumers said rising costs kept them from going out as often in December.

Translation: the on-trade is fragile. Value growth may reflect pricing rather than volume, and further duty pressure is coming in February 2026.

Exports and the US: 7.5x growth from a small base, and TTB approval for Blavod

Export markets saw revenues increase 7.5x year-on-year, albeit from a small base, largely due to altered order phasing in Distil’s largest export market. That’s encouraging, but it also underlines how lumpy export orders can be.

More strategically important is the regulatory green light in the US: Blavod received approvals from the Alcohol and Tobacco Tax and Trade Bureau (TTB), clearing the way to prepare shipments for US sales. Distil is working with Aiko Spirits, its US distribution partner, to land product smoothly and support the launch with marketing. Timelines and initial order sizes are not disclosed.

My take: TTB approval is a real milestone. It removes a hard barrier to entry and turns the US from “aspiration” into “execution”. Early traction will depend on listings and marketing firepower – both resource-intensive – but the door is now open.

New listings and brand building: Blackwoods gets a 22-site on-trade win

Distil secured a significant on-trade listing for Blackwoods with Buzzworks, an award-winning Scottish group of 22 bars and restaurants. Blackwoods gin and vodka will feature in multiple cocktails across the estate. It’s a useful validator for the brand and should add steady, if not explosive, volume.

On top of that, the Blackwoods Brand Home is due to open by the end of January, with tour bookings to follow. Brand homes tend to drive direct-to-consumer sales, trade education, and brand equity – a sensible long-term investment.

Strategy and funding: options open, costs under review

The first stage of Distil’s strategic review, alongside a cost structure review, led to the fundraise announced on 15 September 2025. Proceeds funded Christmas stock, the RedLeg packaging refresh, EU distribution setup, and progress on the Blackwoods Brand Home.

Distil says it is keeping strategic options under continual review to maximise shareholder value. No specifics are disclosed, but it’s clear management is balancing brand investment with tight cost control.

Outlook: duty rise ahead and a cautious industry backdrop

The medium-term outlook remains challenging. Another UK alcohol duty increase takes effect in February 2026, likely squeezing consumer spending further and slowing recovery, especially in hospitality, which is already facing higher duty, business rates, national insurance, and utilities.

Distil plans to continue supporting customers and to build on consumer momentum across on- and off-trade, including the opening of the Blackwoods Brand Home. There is no forward guidance on revenue or profitability in this update.

What this means for investors

• Encouraging consumer demand: RedLeg’s +36% sell-out in grocery, with margins holding at 42%, suggests the brand is resonating, aided by promotions and the new pack.
• Reported revenue volatility: A 26% revenue decline and -39% distributor volumes reflect inventory timing, not necessarily end-demand weakness. Expect noise quarter-to-quarter.
• US optionality unlocked: TTB approval for Blavod and a partner in Aiko Spirits create a credible route to the US. Early sales are not disclosed; execution will be key.
• On-trade remains difficult: A 1.9% value uptick sits against consumer cutbacks and cost inflation. The February 2026 duty rise is another headwind.
• Selective wins: The Buzzworks listing and export order phasing help, but the base is small. Progress is tangible, but scale will take time.

Bottom line: mixed quarter with bright spots

This is a mixed update: top-line down, sell-through up, and margins stable. On balance, I see more positives than the headline revenue suggests, with genuine milestones in packaging, listings, exports, and the US regulatory green light for Blavod. The near-term risk is the duty increase and a cautious on-trade consumer.

If consumer momentum persists and the trade normalises inventory, Distil should see better alignment between sell-in and sell-out. Until then, expect choppy reported numbers, but watch for catalysts: US shipments, Brand Home opening, and any signs of restocking.