For shareholders waiting for South African wine and spirits company Distell to deliver higher returns on their investments, 2020 was a year to forget.
A months-long alcohol ban in its home market, designed to help curb the spread of the coronavirus, slammed sales and earnings, and its shares have dropped by more than a quarter.
The world's second-largest cider maker had already frustrated some shareholders with years of big-ticket spending that they say has delivered an inadequate payoff.
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But chief executive Richard Rushton said that efforts to build up Distell's continental operations and make its domestic manufacturing base more efficient are starting to bear fruit.
In an interview with Reuters, Rushton said that the number of outlets selling the company's products elsewhere in Africa is on course to hit 32,000 by year-end, up from 12,000 a year ago, giving Distell greater growth prospects beyond its home market.
"We're a long-term investment business...So investors have to come along for the ride," he said.
Rushton, who was appointed to the board at Distell in 2013 after approximately 15 years at beer giant SABMiller, has long harboured ambitions to transform Distell into the next "African drinks champion", which is a description that is often attached to his previous employer.
The company has spent 3.87 billion rand ($254.16 million) on expanding its capacity, including manufacturing and distribution, since 2015 - a spending phase that the company says is now largely over.
In Africa, it has built up its operations in other markets by taking stakes in local firms.
Further afield, in Europe, where it leverages internationally renowned brands such as Nederburg wine and Amarula liqueur, it has cut cheaper stock from its portfolio to focus on more premium products.
Things have not always gone Distell's way. Kenya has driven growth, but tough market conditions have forced write-downs in Angola and Zimbabwe. And five years' worth of South African excise duties, rising at almost double the rate of inflation, have eaten away at hoped-for gains.
"They've almost been running to stand still on that front," portfolio manager at top-20 investor Sanlam Investments Charl de Villiers said.
Some investors have exited the stock, down 50% from its 2015 peaks, fed up with little return for all the money spent. Distell's non-African business, for instance, has 100 million pounds in aged whiskey stock, a high margin product but one that takes years to mature.
However, Kate Rycroft, who heads Distell's non-African operations, said that she wants to double their earnings before interest, tax and depreciation (EBIT) margin by March of next year from 5.8% currently.
She also wants to double the non-African operations' annual overall EBIT by 2024 from 148.9 million rand currently. Distell has said previously that it is open to pursuing a joint venture to help it scale these operations.
In recent years, Distell has tempered some of its ambitions to improve shareholder returns sooner.
In 2019, it designed a new long-term share awards scheme that would give return on invested capital a higher weighting of 40%. And it has abandoned aspirations unlikely to pay off, such as selling drinks such as cider outside of Africa.
Even before the alcohol ban, it was set to miss a 2015 target to double group revenue and earnings before interest, tax, depreciation and amortisation (EBITDA) by 2020.
In the year to June 30, group revenues fell by nearly 15% to 22.4 billion rand, while EBITDA nearly halved to 1.84 billion rand when adjusted to account for developments such as foreign exchange movements and restructuring costs in the prior year.
But Rushton said that manufacturing improvements have helped it to recover from the impact of the coronavirus pandemic.
When the alcohol ban in South Africa was lifted, Distell's volumes picked up quicker than those of larger competitors in part thanks to these changes, he said. The company had its biggest ever production week in late October despite having two fewer plants.
High demand in October has also given Rushton hope that the company could recover to pre-coronavirus margins and return on invested capital even sooner than the two to four years that it has guided.
"We'd like to beat it...a lot depends on the second half of the year," he said.
But it's the promise of growth elsewhere on the continent, where many markets have low formal consumption, that attracts many of Distell's long-term investors.
"Really Open Runway In Africa"
"The kicker for this company is that it's got this really open runway in Africa," global beverages analyst at HSBC Anthony Bucalo said.