South Africa’s top producer of spirits, wines and ciders, has bought a 20% stake in a SA producer of dagga-based oils, teas and skincare items. Distell decision to invest in the marijuana market comes as South Africa’s lockdown prohibition laws continue to cripple the liquor industry.

Distell owns popular brands like Savanna, Hunter’s, Klipdrift, Sedgwick’s Old Brown, Nederburg and J.C. Le Roux.

Distell announced that it bought a 20% stake in the local brand RETHINK, which produces a wide range of dagga-based products, including CBD oils, teas, and skincare items. Cannabidiol (CBD) is a chemical compound found in the cannabis plant both in the hemp and marijuana varieties. South African law allows CBD products, not exceeding 20mg per daily dose, to be sold. RETHINK does not produce Tetrahydrocannabinol (THC) based products which have a psychoactive effect.

Remgro’s venture capital arm, Invenfin, will also buy a 20% stake in the company. 

During the first alcohol ban in South Africa to combat Covid, Distell reported that its domestic sales fell by almost a fifth in the year to August. It lost some 100 million litres in sales volumes and an estimated R4.3 billion in revenue due to the lockdown.

Distell’s foray into the marijuana business is expected to fast-track legalisation of dagga in the country, with the company looking to contribute its expertise in distribution and marketing as part of the new acquisition.

South Africa’s dagga industry is expected to be worth R14 billion, with predictions of a surge towards R28 billion by 2024, according to the Department of Trade and Industry and the Agricultural Research Council. 

This major investment outside of the alcohol industry is a first for Distell. 

Report by BusinessInsider

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