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Distell in Scottish whisky expansion deal

16 April 2013

South African wine and spirits producer Distell has signed a deal worth £160-million (about R2.2-billion) to acquire Scotch whisky producer Burn Stewart Distillers Limited from Scottish-based CL World Brands Limited and Trinidad and Tobago-based Angostura Limited.

"The strategic purchase of the fully integrated producer of both blended and single malt whiskies will allow Distell to capitalise on the continuing global growth in whisky consumption and give it access to scarce blended and single malt stocks from prime whisky-producing regions in Scotland, while also enhancing its global footprint," Distell said in a statement on Monday.

The acquisition follows a 2007 equal partner venture between Distell and Burn Stewart to co-own and market three Scotch whiskies in sub-Saharan Africa - Bunnahabhain, Black Bottle and Scottish Leader.

These whiskies are sold in over 60 countries and are selling well in developing markets.

The deal includes three single malt whisky distilleries, a blending and maturation facility, a bottling hall, a dry and finished goods storage site and in-house marketing and distribution.

All whisky currently in maturation is also included in the deal.

Sprinboard into emerging markets

"Our acquisition of Burn Stewart is a very significant development for Distell from a strategic perspective but also given the rich and proud history and heritage of the brands involved," said Distell Group managing director, Jan Scannell.

"Bunnahabhain, the Burn Stewart Distillers' flagship single malt, is made on Islay, considered one of the most prestigious whisky locations by connoisseurs.

There are only eight distilleries on the island, so we are extremely fortunate to acquire this very highly-ranked brand."

Burn Stewart is headquartered in East Kilbride near to Glasgow. It operates a sales and marketing branch in Taiwan, the world's fourth-largest scotch whisky market by volume.

It also has a majority stake in a spirits distribution arm in the US.

Distell said the acquisition would provide a springboard into emerging markets such as Taiwan.

"The Scotch Whisky Association (SWA) data shows that the global whisky market has been one of the fastest-growing drinks segments and after vodka is the world's biggest spirit category by volume," Distell said.

"Consumption has risen across both developed and emerging markets, notably the UK, the US, as well as Latin America, Eastern Europe, many parts of Asia and in key African markets."

The deal is the second major global spirits acquisition, following the 2009 purchase of cognac brand Bisquit from Pernod Ricard.

"The close working relationship with Distell over the 14 years has amply demonstrated the South African group's capacity, experience and expertise to strengthen and grow the company," said Burn Stewart MD, Fraser Thornton.

SAinfo reporter