SABMiller and Distell are the two big beasts of the SA drink scene. Distell was formed in 2000 by the merger of Stellenbosch Farmers’ Winery and Distillers Corporation. Johann Rupert is the ultimate owner of the company and I’d love to know his reaction to the Financial Times feature on Alan Clark (below), new CEO of the brewer, published earlier this month.
The year before the merger, SAB was valued at £3.4bn or R62 billion. Today it is worth £50bn (R912 billion) or almost one trillion Randelas. Distell’s market capitalization today is R31 billion or roughly half what SAB was worth in 1999. Why has beer shot out the lights while Distell has a far more modest corporate profile?
In a word, management. Few would argue that the previous SABMiller CEO, Graham Mackay, who passed away in December from a brain tumour, was largely responsible for this steroidal performance, completing 30 deals in 14 years. So no surprises then that Johann chose an SABMiller manager Richard Rushton to run Distell when Jan Scannell retired last year. But what is curious is that the brewer chose a South African psychologist in the shape of Dr. Clark to replace Graham. Or perhaps not, as psychometric testing is how promotions take place at the brewer, so no wonder a shrink emerges as top dog.
Emerging markets were the golden path trodden by Graham and today 3/4 of SABMiller sales take place in emerging markets. Were Distell managers too timid? SABMiller’s biggest brand is the Chinese beer called Snow. Does Distell sell any wine in China?
Alan told the FT he’s still very much in the acquisition game. “His strategy is ‘very much continuing the drive for growth . . . . we are a growth stock’. That means more merger and acquisition activity as well as organic sales growth. He has mentioned Asia as a potential hunting ground; some bankers see San Miguel of the Philippines as a possible target.
There is also fertile takeover territory, say analysts, in the group’s family controlled joint venture partners – Castel in Africa, Molson Coors in North America and Anadolu Efes in Turkey, Russia and Ukraine. ‘Over time, if the opportunity arose, then these [JVs] would be under serious consideration by us,’ he says. There could also be soft drinks deals – SABMiller is a Coca-Cola bottler in Africa.”
With Johann about to return from a year off playing golf, the pressure on Richard to sweat the Distell assets, must be intense. Given his background and the declared SABMiller game plan, an African JV must be a dead cert. Cider would be one obvious commodity.