‘BEYOND BEER’
It’s unclear at this stage what will be done with Distell’s ‘peripheral’ brands — its wine and spirits labels — in the Heineken takeover. If some are bundled together for sale, there would certainly be no shortage of buyers
There is growing intrigue around Heineken’s plans for Distell’s premium wine and spirits brands.
Most investors would agree that the big attraction is Distell’s cider, ready-todrink and affordable wine brands, which all pitch to the mass market in South Africa and Africa.
But the group also brings several niche brands to the party. These include a brandy cluster — the iconic Klipdrift, Richelieu, Viceroy and premium-priced Van Ryn’s — as well as wines such as Nederburg, Allesverloren, Zonnebloem and Durbanville Hills. Then there are standalones such as Sedgwick’s Old Brown Sherry, Amarula, Count Pushkin vodka and whisky brands Three Ships and Bain’s.
It’s difficult to determine Heineken’s enthusiasm for these brands at this stage. There has been speculation that some might be bundled together for sale once Heineken has properly bedded down the Distell and Namibia Breweries acquisitions.
Certainly, there would be no shortage of buyers. There’s been a fair bit of corporate activity in the local liquor industry in the past decade, kicking off with businessman Viv Imerman’s Vasari buying KWV’s wine and brandy operations in 2016. More recently, investment company Brait sold wine and spirits producer DGB to a private equity consortium, while investment company Sabvest and empowerment group Masimong acquired control of RTD brands specialist Halewood.
That said, Heineken’s new maxim is “stretching beyond beer”. As CEO Dolf van den Brink says in the 2022 annual report: “We have remained committed to win with our expanding portfolio of refreshing brands, focusing on line extensions as we stretch beyond beer.”
The group has “stretched” beer brand Dos Equis into Ranch Water seltzer and lager-style Lime & Salt in the US, and Sol Mangoyada in Mexico. Desperados Alcoholic Sparkling Water launched in the Netherlands with a dash of tequila and lime. It’s even created a malt-based energy drink.
AB InBev, surprisingly, has made some bold moves in the wine category with its Dante Robino winery in Argentina and Babe wines. The launch of Shine Club box wines in South Africa looks very much like an attempt to mimic the success of Distell’s 4th Street offerings.
While Heineken is not big on wine, it might see potential in Distell’s premium category. At the least, the takeover has created speculation about the fate of its wine ranges, particularly the top-end offerings, says wine industry expert
Emile Joubert.
“South Africa needs bigger premium brands to create an awareness for local wines in global markets where we struggle to make inroads,” he tells the FM.
He believes Heineken has the marketing and distribution capabilities to reintroduce these wines into the international marketplace. The way that’s done is important: in his view, vintners need to build big brands instead of simply exporting wine in bulk, which then gets bottled as cheap plonk in export markets.
“Distell and Heineken are certainly capable of building big brands,” Joubert tells the FM. “They could easily take Nederburg, if they did it correctly, to 12million or 13-million bottles — which is the size of a New Zealand wine. Having that in the overseas markets gives South Africa a presence.”
But there’s been no indication yet of Heineken’s wine plans. “Whether there is motivation for Heineken to give the wine brands any real attention and [look] to unleash their potential ... is an open question,” he says.
However, Distell’s success with 4th Street might inspire Heineken to leverage the brand power of, say, Nederburg and Fleur du Cap.
And there’s also Klipdrift, through Viceroy and Richelieu to Van Ryn’s — though KWV has been trying to muscle in on this turf of late. This is probably not a category that can be rapidly expanded into African markets, though its best shot may be through ready-to-drink variations such as Klippies & Cola.
Amarula has already carved a niche in the global cream liqueur market, and was actually the star performer for Distell before the cider business. But even if Amarula increases its estimated global market share of 5%-6%, this probably won’t move the needle at Heineken.
There has already been speculation that Amarula could be sold off to one of the large spirit multinationals. But it seems unlikely that there would be interest in a spirit bundle that includes Amarula, Count Pushkin, and Three Ships and Bain’s.
Still, Distell CEO Richard Rushton believes Heineken’s marketing muscle and route-to-market strength could help build both Nederburg and Amarula into genuine global brands.