Heineken looks to take a swig of South African alcobev firm Distell

 Heineken looks to take a swig of South African alcobev firm Distell

Dutch brewer Heineken has approached Distell Group Holdings Ltd, one of the largest South African alcohol makers with brands like Amarula, Bernini and Hunter’s, to acquire most of its business.

Distell, which is partly owned by diversified investment holding company Remgro and listed on the Johannesburg Stock Exchange, said Heineken has approached it regarding the potential acquisition of the majority of its business.

It did not give specify whether Heineken aimed to pick up a controlling stake or buy brands as assets from Distell.

Distell, however, added that there can be no certainty that an agreement would be reached.

Stellenbosch-based Distell had revenue of ZAR22.4 billion ($1.5 billion) for the year ended June 2020. It commands a market capitalization of $2.2 billion.

The company draws over 70% of its revenue from the home market. The rest of Africa contributes around 19%. International sales comprise the rest.

The spirits business drives around 40% of Distell’s revenue with just 13% contribution in terms of volumes. Key brands in the segment include Amarula, Bain’s, Cape Mountain Whisky, Bunnahabhain, Cruz, Klipdrift, Old Buck, Richelieu, Scottish Leader, Viceroy and Three Ships.

It has been one of the key creators of the cider category in South Africa and claims to be the second-largest global producer of ciders. Distell’s key cider and ready-to-drink brands include Bernini, Extreme, Hunter’s, Savanna and Esprit.

Wines account for a third of the volume and a quarter of its revenue. Its wine labels include Nederburg, Durbanville Hills, Plaisir De Merle, Alto, Fleur du Cap, Pongrácz, Drostdy-Hof, 4th Street, Autumn Harvest Crackling and Original Paarl Perlé.

For Heineken, the deal will help it push its existing products further while adding labels to new categories. For the quarter ended March, beer volume in the Africa, Middle East and Eastern Europe as a region grew the fastest at 22.4% from a year earlier even though on a low base compared to other regions.

The Dutch company said last month that it was expanding its portfolio by moving beyond beer into products such as ciders, hard seltzers and other beverages.

Vivek Sinha

The Capital Quest