Distell urged to dispose of popular brands
--------------------------------------------------------------------------------
Senior Business Correspondent
THE Competition Commission has proposed that the merged liquor group Distell dispose of several liquor brands to black economic empowerment groups keen to enter the liquor industry.
This could lead to substantial empowerment in the liquor industry, which incorporates spirits such as gin, cane, brandy and whiskey. Black groups have already achieved significant penetration in the wine sector.
The R515m merger between Distillers and Stellenbosch Farmers Winery (SFW) two years ago is being heard in the Competition Tribunal, after the Competition Appeal Court upheld the merger saying that it qualified as a notifiable transaction in terms of the Competition Act.
The tribunal has held numerous hearings over the past year, where the merging parties have argued against recommendations being made by the Competition Commission.
The tribunal was considering the licensing route and the outright sale of the brands, or both, as possible remedies for the divestiture of the proprietary spirit brands held under the merger group.
On Friday it was proposed that Distell dispose of several SFW proprietary spirit brands, some of which are very popular, including Mellow-Wood 5 Brandy, Mainstay Cane, Old Buck Gin, Olof Bergh Brandy and Three Ships Whiskey.
Distell's proposal in terms of divestiture has not been made available openly as it is part of its argument in the hearings.
The Competition Commission's legal counsel, Willem Pretorius, said the commission was proposing that a portfolio of brands be sold off to an empowerment group.
He said the portfolio would be viable in its own right and would enhance competition in the market.
The commission's consultant on the case, Michael Fridjhon, who is considered a liquor industry expert, said there were third parties in the industry who would be willing to produce the brands under a licensing agreement.
He said empowerment groups would be able to approach several sources for funding the deal to purchase the portfolio.
"There is a specific black economic empowerment fund in this trust (the SA Wine Industry Trust) which has largely been unsuccessful in finding suitable empowerment candidates in which to make investments," said Fridjhon.
Jun 09 2003 08:48:40:000AM Patrick Wadula Business Day 1st Edition
Monday
09 June 2003
Profile Group (Pty) Ltd. has taken care in preparing all information on this website, but does not accept any liability for errors or out-of-date information.
