I am delaying any decision about Distil. On a number of occasions I have mentioned that the drinks group is a candidate for inclusion in the No Pain, No Gain portfolio. But this month it produced rather disappointing figures.
Readers may recall I earmarked a quartet of possible recruits in December. Patisserie and Peel Hotels have arrived, although I decided against Utilitywise and held off taking a gamble on Distil, awaiting more detailed indications of trading.
Two other shares have been enlisted this year – Interserve and StaySafe – and, during a particularly active period for the portfolio, two stocks sold: Alkane Energy and Spirit Pub Co.
I am glad I ignored Distil. There are sure signs it is heading in the right direction. But it is a tiny player in the highly competitive spirits industry that is dominated by the likes of Diageo, the Johnnie Walker to Gordon's Gin behemoth. And its operations have not been helped by a switch from selling other groups' products, in effect acting as agent, to concentrating on its own lines, such as Blavod Black vodka, Blackwoods gin and Red Leg rum.
Such a policy could eventually pay off and perhaps in the current year it will be possible to detect signs that Distil's switch is working.
Certainly I have not given up on the group and will continue to keep a close eye on it. Indeed I have often wondered about Distil since it arrived in 2004 on AIM – the junior stock market currently celebrating its 20th anniversary. It has, not to put too fine a point on it, experienced a rather dispiriting time since then, undergoing a number of reincarnations.
The shares, at 0.88p, are in the penny dreadful category. At such a price the company is capitalised at £3.8m. They have almost touched 1.5p in the past year and in earlier times were much higher.
Distil, earlier known as Blavod Wines & Spirits and Blavod Extreme Spirits, has not often enjoyed the luxury of being in the black. Certainly in recent, years it has been in the red although the loss of £289,000 just recorded is down from £392,000. Chairman Don Goulding, an experienced drinks man who numbers Diageo among his former employers, reports the transition into own brands has now been completed, with its various labels increasing the year's revenue by 20 per cent.
Agents have been appointed in many lands. The group clearly has high hopes for its Blackwoods gin in the US. It has also established links in many European countries and ventured as far afield as Australia. There are signs it is making headway in this country with an unidentified supermarket chain stocking some products. But, as I have said, it is in a tough business, with the giants of the industry exerting an excruciatingly powerful influence and a host of smaller gin and vodka start-ups battling for what must be the peripheral elements of the drinking set.
Finally AIM's birthday: the market has had its problems and many institutional investors ignore its participants. But some investment trusts are deeply involved, particularly Artemis Alpha, with 40 per cent of its investments in AIM companies, and Diverse Income with 35.5 per cent. Gervais Williams of Diverse reckons AIM could evolve into the new Nasdaq, the exuberant US share market.