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

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.