South African wine and spirits maker Distell said on Tuesday it would set up a standalone company to run its premium wine operation, which it hopes will see its volumes triple in the next decade.
Distell wants to expand sales for its premium products in overseas markets as consumers look for products produced in a more socially conscious way, with less focus on price.
The new unit, called Libertas Vineyards and Estates, will be wholly owned by Distell and house all its premium wine brands, such as Nederburg and Alto. It will be led by an independent board of industry leaders, the company said in a statement.
“We are making bold decisions regarding how we operate and compete,” the new firm’s Managing Director Kay Nash said. “There is recognition that the category is challenging and inherently complex and requires a specialist focus.”
Distell has been grappling with tough trading conditions in South Africa, where a sluggish economy and rising cost of living have hit consumers’ disposable income.
South African wines have been declining in markets like Sweden and Germany, a trend Distell wants to reverse.
Nash said the new firm would streamline operations, which now include eight brands and 40 sub brands in 88 markets and encompassing 22 grape varieties. Distell had reduced the size of its premium portfolio in 2017.
“The cost of this complexity is significant,” Nash said.