World’s No. 3 Spirits Maker Buys 50% Stake In SA Distributor

 In news

U.S.-based Beam Suntory, the world’s third-largest premium spirits manufacturer, has acquired a 50-percent equity stake in South Africa-based independent spirits distributor ABV Brands Proprietary Ltd.

South Africa is the continent’s largest spirits market and the acquisition will help Beam Suntory to establish a strong foothold in Sub-Saharan Africa, according to AfricanBusinessReview.

So what’s the difference between premium liquor and the cheap stuff? And are premium spirits really better? You get what you pay for, according to a report in LiveScience.

“More expensive premium liquors often have natural ingredients and more careful distilling and aging processes, so they earn their higher price tags, even if price remains an imperfect measure of quality,” Jeremy Hsu reported.

Beam Suntory’ partnership with ABV will help it to become a key player in Sub-Saharan Africa, said Albert Baladi, international president at Beam Suntory, in a prepared statement.

“The African spirits market has phenomenal growth potential for Beam Suntory and our global whisky and cognac portfolio is ideally suited to capture the growth of premium spirits,” Baladi said. “This partnership gives us a beachhead, and we will continue to look for opportunities to become a key player in Sub-Saharan Africa by expanding our footprint, growing our brands and securing strong routes to market.”

The global spirits industry sees Africa as the final frontier—a potentially huge market that is largely untapped, WallStreetJournal reported in July.

Between 2013 and 2017, the continent’s liquor market is projected to grow by 45 percent, to $2.39 billion, global giant Diageo told investors. Diageo is the world’s largest producer of spirits.

There are wealthy consumers in Africa who can afford expensive Western liquor but cheaper local brands dominate the rest of the legal market, WSJ reported.

South Africa’s ABV Brands was established in 2010 by entrepreneurs, Ross Calow and Daniel Hawkins, along with Cyprus-based FIX Wines and Spirits.

Beam Suntory, a subsidiary of Suntory Holdings of Osaka, Japan, bought its 50 percent stake from FIX. The remaining 50 percent is owned by ABV Brands’ co-founders and management team.

ABV Brands has been the Beam Suntory’s distributor in South Africa since 2010. During this time, ABV Brands helped grow sales of Beam Suntory’s brands by more than 260 percent, driven in part by double-digit growth of Jim Beam and Courvoisier, according to a press release.

The partnership will allow for further investment in sales and marketing to expand distribution and reach more consumers, the company said. ABV Brands wants to be among the top five distributors in South Africa by 2020.

“This is a fantastic opportunity to combine ABV’s local expertise and agility with Beam Suntory’s global scale and portfolio of premium brands,” said Ross Calow, managing director of ABV Brands.

ABV distributes brands including Jim Beam, The Macallan, Maker’s Mark, Famous Grouse and No. 3 Gin. Source: AFK Insider

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