Marthélize Tredoux: Breakfast with Distell

September 15, 2017
by Marthelize Tredoux
in Opinion & Analysis
with 6 Comments

This week, I along with some other wine media and industry members cracked an invite to have a sit-down with the head honchos at Distell. We had been contacted and told that SA’s largest producer-wholesaler was interested in opening up channels of communication and that they intended to make this a regular occurrence.

Stellenzicht

Stellenzicht no more.

Before we get into it, some context: There has been plenty of speculation around the dissolution of the Lusan Premium Wines (the joint venture between Distell and German financier Hans Schreiber which at one point involved Le Bonheur, Uitkyk, Stellenzicht, Alto and Neethlingshof)  and the selling off of a number of wine farms and my feeling that this roundtable discussion was conceived – at least partially – because they wanted to take control of the discussion around this move.

We sat down with a number of Distell’s management, including Richard Rushton (CEO), Lucas Verwey (Director: Finance), Bridgitte Backman (Director: Corporate and Regulatory Affairs) and Steve Nathan (Director for International Operations). Rushton welcomed us and indicated that the goal of the meeting was to convey some information to us on the company’s plans in terms of wine specifically and also to take questions.

It was a lengthy discussion, with management addressing most of the questions fired off directly and without too much corporate spin, and handling any and all criticism alluded to with candour. Going into the details of it all will be lengthy, but there are a few key points worth mentioning:

  • Wine makes up one third of their business (revenue and profit), but Rushton also pointed out that the company’s origins are firmly rooted in wine (and brandy). With that, despite selling off wine properties, wine remains a focus and crucial product category for them.
  • Dissolving the Lusan partnership was due to a number of factors, but in overview it can be said that the company feels it is spread too thinly across a number of premium wine brands, leaving them unable to build them all out to their full potential. As such, they are downsizing so they can focus on four key wine brands: Nederburg, Durbanville Hills, Fleur du Cap and Alto.
  • Questions were asked around the plans for smaller brands, such as Plaisir de Merle, Zonnebloem, Uitkyk and Jacobsdal. For now, they will remain in the Distell stable and are not on the chopping block yet, though their potential as stand-alone brands does not seem as strong as the four mentioned above.
  • Writer Tim James asked some hard questions, including querying their attitude and relationship towards farmers – specifically around issues such as contracting early and various pricing issues, which often see the farmers at a disadvantage. Rushton candidly admitted this is something he does not approve of, and that they are engaging with producers to make necessary changes to the model, including engaging in longer term contracts and focus on sustainability. As he rightly points out, insufficient price increases will see farmers go bankrupt which is not sustainable.
  • The four international markets that will mainly be targeted are the USA, UK, Canada and Asia. Looking to emerging markets within Africa are also still on the table.

A lot more was discussed and questioned and I surely won’t be the only one writing about it. For me, it is worth finding context and perspective for this meeting and pinning a value on the exercise.

Was this meeting strongly tied to a mix of gossip and criticism around the recent moves in the Distell portfolio and property stable? Probably.

Was it a polished PR/Communications exercise? Possibly.

What will come of this discussion? In isolation, probably not much. But if this does become a more regular occurrence – and they involve people from all corners of the wine industry – it could become a useful platform to convey criticism, opinions and ideas and maybe even bring about some changes.

The wine industry is a sucker for the David and Goliath imagery, and any action by large players is often shrouded in cynicism (sometimes rightly so…). Yet publicist Emile Joubert made a good point regarding their role in “generic marketing” – they do a good job of keeping wine in the public eye through levels of spend on various forms of advertising and broad marketing that can’t be matched by most other producers. Yes, of course they’re promoting their own brands. But they are ultimately also promoting wine.

So now what? That depends. We can start by making the most of this call for comment and take valid criticisms straight to the source. I’ve been prattling on about platforms to discuss industry issues since I started attending VinPro events three years ago. So in principle, I fully support this endeavour.

Perhaps by dispensing with the usual, useless muffled grumblings of disapproval and replacing it with some constructive, intelligently articulated criticism, some of the pricklier industry issues can be resolved – or at the very least, addressed.

Is one breakfast meeting going to change anything? Don’t be daft. But it might be a start.

  • Marthélize Tredoux is the co-owner and editor at Incogvino. By day, she helps SA wineries sell their wine in the USA. She won the Veritas Young Wine Writers Competition in 2013.

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6 Comments

  1. Jan CarlssonSeptember 17, 2017 at 10:16 pmReply

    Marthelize! Did you ask them about the “praxis” to pay money to get wines on wine lists? According to my information is very much in practis by Distell. They also has the muscels to do so!

    Jan C

    • MarthelizeSeptember 18, 2017 at 9:05 amReply

      Hi Jan
      Are you referring to the “practice” of paying to feature on wine lists?
      It didn’t come up, I’m sure it could be addressed in future if they hold true to their intent on making these discussions a regular thing.

  2. jonnieSeptember 17, 2017 at 5:24 pmReply

    Did Distell outline if ‘J C Le Roux ‘also to be sold on?

    • MarthelizeSeptember 18, 2017 at 9:08 amReply

      Hi Jonnie,
      Incidentally, we were hosted at JC le Roux.
      Nobody specifically asked about that, though it seemed safe to assume that JC le Roux (as the only MCC house) would not be touched. While Richard Rushton didn’t specifically name JC as one of the top 4 wine brands they’d be focusing on, I’m going to make the leap here and say that JC will remain as a fifth, though it falls technically under a different category.
      So – no, I don’t believe JC le Roux will be sold on.

  3. MarthelizeSeptember 15, 2017 at 9:36 pmReply

    Hi Angela,

    Tim did ask Richard Rushton about Razvan’s replacement. They have feelers out but nobody specific apparently in mind or on their way. They seem to want to take their time on this one.

    And yes – I think they’re very aware of what’s going on at the top end. They are taking a hard look inward but it feels like the focus is to get their own house in order rather than mere navel-gazing.

    I believe they want to be bona fide players in premium/ultra premium and upwards categories (incidentally, they work internally off a higher R/liter value for “Premium” and “ultra premium” than Vinpro uses in their stats). There seems to be a keen interest to beef up the top end (which links to their decision to cut the portfolio and focus on 4 key wine brands), and then maybe drag the middle upwards to improve mid-range options.

    Then of course keep the low-end, high volume, high profit wines (e.g. Fourth Street) playing hard.

  4. angela lloydSeptember 15, 2017 at 12:10 pmReply

    Any discussion about Razvan’s replacement? Did you get the feeling Distell is aware of what’s going on at the top end of the industry? In other words, they’re not overly inward looking?

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