Trading Update

6 September 2012

Blavod Wines & Spirits PLC

Trading Update

The Board of Blavod Wines & Spirits plc (AIM:BES) ("Blavod" or the "Group"), owner of premium drinks brands including Blavod Black Vodka, Blackwoods Gin and RedLeg Rum, is pleased to give a trading update for the period ended 30 June 2012.

Highlights

• Year on year sales volumes growth of 19% with revenues* improving by 13% (despite portfolio rationalisation) 

•  Gross margins increasing strongly  

  • Own brands up from 36% to 47%* 

  • Continuing agency brands up from 18% to 22%* 

• Operational costs reduced by 14% when compared to the equivalent period last year  

• New customers secured including a UK pub chain with 400 outlets 

• RedLeg Spiced rum - one of the best selling spirits at recent summer festivals
   

* Net of duty

Current Trading

The changes made by the Board between October 2011 and April 2012 have had a positive effect on the performance of the Group as can be seen by the improved performance of both owned and agency brands.

Several management changes were made, as well as improvements to enable faster processing of orders and the installation of systems to improve the level of management information. At the same time the portfolio of agency brands was reduced with a focus on fewer more profitable brands which simplified the business considerably and lessened the working capital requirements of the Group. As a result, those agency brands which were retained grew by 50 per cent. A greater focus was also placed on developing high quality UK accounts, reducing the Group's credit risk. At the same time, the Group has improved both its debt collection and stock management.

In the period, we have achieved significant success with our owned Blavod brands, such as Blackwood's Gin and third party owned brands such as Bruichladdich Malt Whisky, in becoming more widely available through new listings in a number of UK pub chains and the major multiples.  We also achieved a successful launch of our own brand drink RedLeg Spiced Rum, which has rapidly become popular as a result of a number of original and innovative marketing initiatives.

RedLeg was one of the best selling spirits at three music festivals this summer in the South of England, and was successfully cross marketed with a newly launched soft drinks brand in bars. Other innovative marketing initiatives have included RedLeg sponsored "jamming" nights which have been sold out and the production of a RedLeg Cocktail book for bar staff.

The Group has also successfully focused on improving the performance in export markets and this included rationalising stock levels in the USA and Spain and opening new markets in four territories in Asia. Sales in continental Europe have increased by 25% year on year following the agreement signed with Waldemar Behn GmbH last year.

Don Goulding, Executive Chairman of Blavod, said:

"The performance of the Group is improving significantly and we have taken the necessary steps to cut costs and provide a good platform from which to develop our own brands and those we represent into market leaders. This will take time and additional financial resources, but we believe we have the knowledge and experience to achieve this "

For further information please contact:

Blavod Wines and Spirits plc
Don Goulding Executive Chairman	Tel: [phone]
N+1 Brewin (NOMAD & Broker)
Robert Beenstock Richard Lindley	Tel: [phone] Tel: [phone]
Cadogan PR
Alex Walters	Tel: [phone]

About Blavod

Blavod Wines & Spirits plc is listed on the Alternative Investment Market (AIM:BES). It owns drinks brands in a number of sectors of the alcoholic drinks market. These include premium Vodka, premium Gin and Rum and are called Blavod Original Black Vodka, Blackwood's Vintage Gin & Nordic Vodka, Diva Vodka, Jago's Cream liqueur and RedLeg.

The Group markets and sells these brands in the UK as well as a number of international markets including the US and Russia and has recently announced an agreement with Waldemar Behn GmbH for them to produce, market and distribute Blavod black vodka in Germany under a licensing agreement to their domestic and Duty-Free/Travel Retail markets as well as continental and Eastern Europe.

Through a wholly owned subsidiary Blavod Drinks Ltd, the Company represents a portfolio of premium quality spirit and liqueur brands in the UK which include Bruichladdich Islay Malt Whisky, Mickey Finn Schnapps, Fernet Branca, Punt e Mes, Antica, Formula, Hapsburg Absinthe, Hpnotiq and Pama Liqueurs.
www.blavoddrinks.com

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Source: Blavod Wines & Spirits plc via Thomson Reuters ONE

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