Cosy Club Explodes

The cosy club of SA wine distributors has just been exploded wide open with the news that Du Toitskloof are pooling distribution infrastructure with Namaqua, Van Loveren and US giant E&J Gallo. This bombshell drops as Vinimark showcase their offerings to Johannesburg restaurateurs at Summer Place this evening. Namaqua, Van Loveren and Gallo are already a ONE BILLION RAND business and the inclusion of Du Toitskloof adds another R150 million to turnover plus African exposure in Namibia, Botswana and Malawi. Is this the new shape of Walmart’s wine retailing?

vm Cosy Club Explodes

The new initiative is bad news indeed for Distell, Vinimark and Meridian who will have to starting pulling finger to justify their distribution margins which can be as high as 35%. Distell are probably better placed than the others to compete as tasted blind, Distell brands serially outperform the competition. At least in the tastings for one major supermarket chain I’ve participated in recently. It’s also good news for SA consumers, as smaller price increases are expected for wine brands going forward.

The enlarged entity will be no Costco, the US behemoth whose wine buyer famously sees little difference between wine and toilet rolls, as individual brands will retain their distinct identity. The owners of Vinimark are having a seriously bad hair day today.