Distell sells off wine brands

South African drinks group, Distell, has divested itself of several vineyards and estates as it seeks to concentrate on just four key brands.

The company has reportedly sold off the Le Bonheur and Stellenzicht estates and their respective ranges and more wine assets may follow as the group has said it intended to streamline its wine portfolio and concentrate in particular on: Nederburg, Fleur du Cap, Alto and Durbanville Hills.

Managing director Richard Rushton told Business Daily that: “Agreements are significantly advanced on what [wine] assets we will be left with.”

Chris Logan, CEO of Opportune Investments and a Distell shareholder, told the same journal he thought the move was “long overdue” and that it made sense to focus on the very top brands, especially as wine makes up a very small part of Distell’s overall business. He drew parallels with Distell’s recent move and Treasury Wine Estates actions a few years ago to divest itself of non-essential brands thathave subsequently helped the Australian group dig itself out of serious financial difficulty.

The news came as Distell announced its half-year results last month, which Rushton said showed the group was delivering “solid operational results.”

Overall, group revenue increased by 3.7% to R22.3 billion, while maintaining volumes. The spirits portfolio was the standout performer, delivering strong volume and value growth while the wines held their own and the cider and ready-to-drink (RTD) category showed a volume recovery.

Headline earnings however were down 3.6% to R1.6bn, heavily impacted by the current strength of the rand.

The group said: “Global economic growth remains muted while African GDP growth is still being impacted by low commodity prices. On the domestic front, recessionary circumstances continue to put additional pressure on consumers.

“A modest recovery in economic growth can only be expected in the latter half of next year.”