Distell’s premium-wine offshoot aims for the top
By Richard Holmes - Mar 15th, 14:37
"I’m in the business of wine; I’m not in the wine business," says Kay Nash emphatically.
That may seem like splitting hairs, but it’s a subtle distinction that’s helping the CEO of Libertas Vineyards & Estates, the new premium-wine offshoot of drinks giant Distell, to shake up the company’s high-end wine business.
"It’s a complicated category, and on the one hand not having deep wine experience is a disadvantage … but the upside is that I don’t have vested interests," says Nash, whose managerial CV ranges from Vital Health Foods to Kagiso Media. "I don’t have a network, I don’t have a history in the industry. That’s allowed me to bring a new strategy and operating model, to look for a way to be more profitable, more collaborative."
The launch of Libertas in January is the latest step in Distell’s efforts to make its premium-wine portfolio more profitable. In 2017 it dissolved its Lusan partnership, selling off iconic estates including Neethlingshof, Le Bonheur and Stellenzicht. That unbundling, and the formation of Libertas as a standalone wholly owned company comes down to focus, says Nash.
"The premium fine wine business is, by its nature, a complex category. We have different cultivars, different vintages, different brands and sub-brands. That type of complexity demands focus, and if you don’t do it extremely well it can be a very costly business."
Not all ties are being cut, and Nash is keen to leverage economies of scale within the wider Distell group. But without the distraction of the group’s mass-market wine brands, Libertas is free to concentrate on its premium and heritage brands, including Alto, Durbanville Hills, Plaisir de Merle, Pongrácz, Fleur du Cap and Nederburg.
"We have a nice mix of brands in the portfolio," says Nash. "Some are massive profit generators, and some are strategic growth levers with high margins and high growth."
Selling premium wine is less about price point and more about perception, and elevating the brands’ touch points in the Winelands is high on her to-do list.
"Our brand homes play such a critical role in our marketing mix. We need to elevate the importance of these homes, and how we take these brands into the world," says Nash. "Our brand experiences, our brand homes, our vineyards; they need real love and attention."
Alongside a major overhaul of the historic Oude Libertas site on the outskirts of Stellenbosch, top of Nash’s to-do list is Nederburg. It is arguably the flagship in Distell’s wine portfolio, and a brand that has "through the years rocked and rolled in all sorts of different directions", says Nash, for whom price points are a major concern. "The brand simply cannot stretch from R30 a bottle to R1,000, so we are definitely going to reduce that stretch."
Beyond ensuring the profitability of Libertas, Nash also speaks passionately about the company’s role in ensuring the sustainability of the SA wine industry, where the total area of hectares under vineyard is falling year on year.
While acknowledging the role mass-market wines play in recruiting customers to the wine category, Nash flags premiumisation (charging more for top-end wine) and export markets as being vital for future sustainability. Both are areas in which Libertas can contribute.
"All credit to the innovators, the disruptors, the Swartland guys, who have started to create some real consideration for SA wines in the super-and ultra-premium price tiers," says Nash.
"We take our hats off to them, but what’s needed is for the bigger players like ourselves to get on board, to collaborate and bring some of the platforms that we own — like the Nederburg auction — to benefit the entire industry. How do we use our reach, and our access, to support the industry as a whole?"
Raising price points, and volumes, in the traditional markets of the UK and Europe is important. However, China is the game-changing market, says Nash.
"But we need to realise it’s not a market, it’s a number of cities. It’s a whole darn continent."
"For Libertas, China is the space we need to focus on."
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