VODKA to Sambuca firm Blavod Wines & Spirits today issued a profits warning and said its products lost out to heavily discounted rivals over the Christmas period.
The firm - whose brands include Blavod Black Vodka, Borghetti Sambuca and Cockspur Rum - said sales were "well below expectations" in the three months to December 31.
Blavod said higher prices on several of its key products meant customers were drawn to competitor promotions and sales volumes grew by 1% in the quarter compared to the previous year.
The firm said despite its predictions of a better fourth quarter it would not make up for the poor Christmas and New Year trading.
It also said the business had suffered unexpected exchange losses and one-off costs, meaning profits will be "severely affected" with expectations of a "break-even" level compared to profits of £185,000 in the previous year.
Blavod, which said it was not exposed to the recent collapse of Threshers owner First Quench, said its "very prudent" credit policy meant that both UK and export sales had been held back in the third quarter.
But the firm said it would continue to increase investment in brands and its sales teams.
"Whilst this setback is very disappointing, the board believes that it is short term, and is confident of achieving a meaningful profit in 2010/2011," the firm said.
"There are major causes for optimism; Blavod will regain UK distribution, and new initiatives are in hand to support the Blavod brand."
It said moderately higher prices on several brands would improve margins and enable further advertising and promotional support.
It also plans to launch a number of new products in the spring.