As a manifestation of tough times for the South African wine industry, Distell announced today that it will put two of its wine assets – Alto and Plaisir de Merle – on the market. Furthermore, Libertas Vineyards and Estates (LVE), the business unit established about a year ago to look after Distell’s premium wine portfolio, is being reintegrated into Distell.
In its official statement, Distell says wine contributes approximately 35% of total group volumes and 27% of group revenues. However, the statement said that “following deep consideration and extensive analysis initiated in 2019,” the LVE business entity will reintegrate back into Distell as the company “continues its focus and prioritisation of wine.”
During December 2019 the group reported a 6.6% fall in volumes for the reporting period, with profit falling 1.2% to R1.26 billion.
CEO Richard Rushton said the ability to meet consumers’ needs across multiple categories in the mainstream and accessible premium price tiers was central to the company’s success. “Our strategy aims to continue to bring the businesses closer to consumers and recession-proof the group by improving efficiencies and decentralising operations,” said Rushton.
The Nederburg, Durbanville Hills, and Pongrácz brands will continue to play a significant role in Distell’s wine portfolio, as will the smaller asset-light brands of Fleur du Cap, Zonnebloem and Chateau Libertas.
On Alto and Plaisir de Merle, Rushton says “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.”
“We have fantastic wine brands, including Nederburg as South Africa’s leading brand as well as being the largest exporter of wine into Africa – and we intend increasing our consumers love for them,” he said. “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 will continue to focus on scaling accessible premium and mainstream wines, which are key to profitability and returns. In so doing, it confirms its support of, and investment in, the industry to ensure the sector’s continued success locally and globally.
“The wine industry remains important to Distell (and to South Africa) in creating jobs, and we will not curtail our passion, role, and involvement in the sector,” said Rushton. “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. “