Scotch Malt Whisky Society owner warns over China's zero-Covid stance

Scotch Malt Whisky Society owner Artisanal Spirits Company has warned that the Chinese government’s zero-Covid strategy has presented “additional challenges for our business”.

Updating investors on its recent trading performance, the group said the positive momentum reported at the time of its full-year results in March had continued into the spring.

Revenue growth in the period to April remained above 30 per cent year-on-year while global membership growth was now slightly ahead of management expectations, up by 25 per cent year-on-year to just over 35,000. The membership figure is seen as a key indicator of future revenue growth.

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The firm said: “Year on year growth of over 30 per cent in part reflects cycling over low Q1 2021 sales in UK venues and Europe and we remain cognisant that comparative performance figures will get tougher in the second half of the year.

“Furthermore, the Chinese government’s zero tolerance approach to managing Covid-19 has presented additional challenges for our business in that territory in the current quarter.

“However, we continue to make encouraging progress against our strategy and the group remains on course to deliver strong revenue growth for the full year in line with current consensus market expectations.”

The board is anticipating 2022 revenues of about £21.6 million.

At the end of March, the company cheered a double-digit rise in membership alongside stronger annual sales.

The Artisanal Spirits Company is the owner of the Scotch Malt Whisky Society and a leading curator and provider of premium single cask Scotch malt whisky and other spirits.

Releasing results for 2021, the group reported a 21 per cent hike in revenue to £18.2m, comfortably ahead of market expectations.

Gross profit rose 27 per cent to £11.2m on the back of the revenue growth, as well as a gross margin improvement to 61.5 per cent, from 58.6 per cent a year earlier, which was largely attributable to the long-term suspension of US whisky tariffs.

There was an underlying loss of £600,000 reported for the year, swinging from a profit of about £600,000 the year before, with planned ongoing investment for growth offsetting the increase in gross profit.

Loss after tax amounted to £3.4m, including the impact of almost £1m of exceptional costs relating to last June’s initial public offering, which saw the group join London’s Alternative Investment Market.

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