Distil, the AIM-listed owner of RedLeg Spiced Rum and Blackwoods Gin, has issued a trading update warning that full-year revenue to 31 March 2026 will be materially below market expectations, with losses set to be larger than forecast.
The real issue is that slowing sales has created, as the board described, an immediate short-term funding need, and it is now exploring options to address it.
Investors never want to hear about a funding need, and shares sank 60% on Tuesday.
The group said anticipated Q4 revenues are significantly below forecast, compounding softer trading throughout the year.
The main problem is higher-than-expected stock levels sitting with third-party distributors globally, which has disrupted purchase phasing even as end-consumer sales have improved.
There are some bright spots at the brand level. UK distributor sales to customers rose 51% year on year in the first two months of 2026, while RedLeg consumer sales in grocery outpaced the wider market over Christmas, climbing 36% against a spirits category that fell 5.2% in the 12 weeks to 3 January.
But the broader backdrop remains tough. Successive duty increases since August 2023 have added at least 50p per bottle, at a time when consumers are tightening their belts.
Elsewhere, the planned US launch of Blavod black vodka has been delayed by a hold-up with the Craft Beverage Modernization Act submission, though the distributor expects to resolve this in Q1 of the next financial year.
Increased promotional activity has been agreed with major grocery accounts for Q1, and the company is reviewing its distributor arrangements and route-to-market, with further news expected shortly.
Distil previously announced that unaudited third-quarter revenues fell 26% year on year to £173k, with volumes into distributors down 39%, although consumer-level volumes rose 36% over the same period.
This level of revenue is difficult to support a listed entity, and investors will fear what value they will be left with after the funding is completed.