Distell Group, South Africa’s largest wine and Spirits Company on Tuesday announced it has acquired a 26.43% stake in KWA Holdings East Africa Limited (KWAL), Kenya’s largest wine and spirits manufacturer and distributor, from Centum Investment Company Limited, increasing its ownership in the firm to 52.43%.
Distell first acquired a stake in KWAL, when in 2014, it took a 26% shareholding in the Industrial and Commercial Development Corp (ICDC).
The purchase of additional shares by Distell does not affect the existing shares of ICDC, which still holds a 42.65% stake in KWAL, with distributors holding the remaining 0.92%.
KWAL enjoyed a near monopoly in the industry until 1992/1993, when the Kenyan government liberalised the economy opening up the firm to stiff competition.
The firm now faces competition from such rivals as East African Breweries Limited (EABL), a Diageo company; Keroche, London Distillers, Wines of the World and African Spirits, among others.
Distell’s relationship with KWAL dates back to 1998 when the South African firm signed an exclusive distribution agreement with the firm to market its brands such as Viceroy, Amarula, Drostdy-Hof and Cellar Cast in Kenya.
However, the increase in stake by Distell follows barley three months after Kenya’s antitrust regulator granted KWAL a five year exclusive deal to be the sole importer and distributor of Distell’s brands in Kenya.
KWAL sold more than eight million litres of alcoholic beverages in 2016, driven by popular local brands such as Kibao, Kingfisher, Caprice, Hunters Choice, Simba Cane, Beehive brandy, Yatta grape juice and Yatta wines.
According to regulatory filings with the country’s antitrust regulator, Distell brands such as Amarula, Viceroy, Drostdy-Hof, Two Oceans, and Chamdor juices, account for about half of Kwal’s turnover.
Distell notes that its strategy is to expand geographically through acquisitions with regional scale players who have leading brands, rich heritage, and strong platforms in their core markets.
“With a population of over 47 million people, Kenya is expected to be one of the fastest growing economies in Africa, driven by rapid urbanization and strong income per capita growth across major cities over the next decade.
“Spirits has been the fastest growing segment of Kenya’s alcoholic beverage industry and growth is anticipated to remain robust going forward,” said Donovan Hegland, Distell Africa, Managing Director.
“This will provide the platform for sustained growth and further cement KWAL’s position as Kenya’s national champion,” said Carlos Gomes, KWAL’s Managing Director.