With SA wine exports collapsing faster than the strongmen of the Middle East, this afternoon’s financial results from the mother of all drinks companies Distell, with an incredible 45% SA market share (according to Benjamin Lewin MW in Wine Myths and Reality p.232), are probably being celebrated as I type with double Klippies en Coke in the corporate boma.

Mighty Merwe Botha, Distell Financial Director

On a market value of R15 billion, Distell made R630 million profit in the six months to December after tax. Compare and contrast to the six months profits of KWV, rumoured to be around R6 million on a market cap of R800 million (Jannie Mouton’s valuation). So is Distell making 100 times the profit of KWV on a 20 times market cap?

Is there an arbitrage opportunity here, Mr. Buffett? Is Distell undervalued, KWV overvalued or both? Hard to tell Mr. Soros, as a new collection of bristly brooms has moved in to La Concorde, led by mop-headed Marcel Golding and the sound of furious sweeping is heard on Main Street, Paarl.

The Distell numbers confirm just how bad exports are: the rest of the world supplies just 18% of profits (down from 32% in the first six months of 2010) and of these Africa kicks in a healthy two thirds.

Perhaps the time has come for Distell to become an even more African company and make even more of the fruit driven palate friendly wines and spirits that have made the competition, Four Cousins, top selling bottled wine in SA. With Oude Meester the hit in Lagos bars (where it is called Dudemeister), Obikwa the generic name for wine in Liberia and Amarula the consummate African cocktail, is the European export game even worth the candle? Time to move the head office to Sandton, Mr. Scannell and finally follow the advice of Cecil John Rhodes to look north.

Africa’s population will double from 1 to 2 billion souls by 2050 and the continent has long relied on the south for electricity, mining and farming entrepreneurs, supermarkets and satellite TV. So why not drinks?