Distell to consolidate core wine brands, sell some 'ultra-premium' assets

Distell announced on Monday that it will consolidate its core wine brands and capabilities to focus on growth in mainstream and accessible premium segments.

The company is one of Africa's leading producers of spirits, wines, ciders and "ready-to-drinks" (RTDs) as well as the world's second-biggest producer of ciders. Some of its top brands include Amarula, Hunter's, Savanna, 4th Street, Klipdrift, Nederburg, Richelieu, Viceroy, and J.C. Le Roux.

Distell buys 35% of South Africa's grape volumes each year, of which less than 4% is from its own farms. Its wine business represents about 36% of total wine sales by value in South Africa, and it is the largest exporter of wine into Africa. 

Its five-year strategy, presented at its recent interim results presentation, includes a further focus on sustainable growth and returns, "leveraging core strengths and capabilities to drive, defend, and expand its markets on the African continent and select International markets", it said in a statement on Monday.

It has decided, after careful analysis, that the Libertas Vineyards and Estates (LVE) business entity will reintegrate back into Distell. It foresees that the Nederburg, Durbanville Hills and Pongrácz brands will continue to play a significant role in its wine portfolio, as will the Fleur du Cap, Zonnebloem and Chateau Libertas brands.

Distell will also continue the process of selling certain assets. Therefore, to utilise its strengths in the mainstream and accessible premium wine segments, the company says it will unlock value from certain assets on the balance sheet with Alto and Plaisir de Merle being put on the market.

"These iconic, ultra-premium brands compete and focus in the super-premium categories and would be sold to owners more focussed in this segment, to make them thrive," Distell CEO Richard Rushton says in the statement.

"Managing our wine brands collectively will bring significant synergy to the business locally and internationally, further enhancing our ability to meet customer’s needs."

Distell says it will continue to focus on scaling accessible premium and mainstream wines, which are key to profitability and returns. Therefore, it will continue to support and investment in the industry to ensure local and global success.

"We are committed to supporting our farmers and customers through this challenging period as a result of the lockdown and appreciate how tough this is for us all," concludes Rushton.

- Compiled by Carin Smith

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