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Thu 19 Jun 2003, 10:49 Tribunal orders Distell to relinquish brands
Senior Business Correspondent 

THE Competition Tribunal has ordered the merged liquor group Distell to relinquish control of two of its key brands in the SA proprietary spirits market the Martell and KWV brands. 

The decision is aimed at eliminating the potential monopoly by Distell in the proprietary spirits market. The tribunal also ordered that none of KWV's directors sit on the Distell board. 

The ruling finalises the approval by the competition authorities of the merger between Stellenbosch Farmers Winery (SFW) and Distillers Corporation to form Distell, which was initiated in 2000. 

The R515m merger has been contested by the Competition Commission and has been the subject of hearings by the tribunal for the past two years. The order means that control of the Martell brand would revert to the owner of the brand, Pernod Ricard, while control of the KWV brand goes back to KWV. 

The Martell brand has recently been the subject of vigorous litigation in which Distell had won the right to retain its distribution rights. However, in terms of this order, Distell would terminate all contracts with Martell (this would include Martell VO and Martell 5 Star). 

Distell would similarly terminate its distribution agreements with KWV in respect of all KWV brands (including KWV 10- and 20-year old Brandy). 

Distell MD Jan Scannell said that although it was not easy to give up the premium brands in which the group had invested heavily and built market share in a keenly competitive market, he was relieved that the process had been finally settled. 

He said the removal of uncertainty allowed Distell to focus on its plans to become a leading SA force in global beverage markets. "We can now get on with our plans to grow internationally and to compete head-on with the large global conglomerates. 

"We are further relieved that job losses have been prevented," said Scannell 

The tribunal panel's view was that both Pernod Ricard and KWV were companies with considerable resources and expertise in the liquor industry and were capable of providing viable competition in the proprietary spirits market. 

Distell corporate affairs director André Steyn said an agreement had been reached on the terms of the transfer, including compensation. Brand-owner Pernod Ricard would take over the marketing and distribution of Martell brandies from July 1. 

Both parties expected the transition to proceed smoothly. 

Steyn said KWV would also take over the marketing and promotion of its brands on July 1, although Distell would handle distribution until June 30 next year. 

"Distell has a wide range of brandy and other spirit brands that cover the full spectrum of consumer choices, and is thus in a position to fill any gaps left by the departure of the two agency brands." 


Jun 19 2003 06:10:46:000AM Patrick Wadula Business Day 1st Edition

   Thursday 
19 June 2003
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