Established as the dominant force in its domestic wines and spirits market and as an exporter to other African countries, South African group Distell is now aiming to raise its profile in global markets outside Africa, both in the wine sector and in the liqueur category with its Amarula Cream brand. Nuria Sadurni of Euromonitor International reports.

In its domestic market, South African drinks group Distell has continued to strengthen its grip on the highly competitive alcoholic drinks sector but it is in its international business that the company is looking to make truly purposeful strides in the next few years, aiming to become the "reference South African wine business in Europe".

And it is not just in the wine export business that the company is upping the ante. Distell is also aiming to grow its Amarula Cream liqueur into a leading global brand.

Over the last 18 months, the company has undertaken a series of joint ventures and alliances that will not only bolster its presence in Europe, but will also strengthen its ties as far a field as North America and Asia Pacific.

Of course, export markets nearer to home are clearly of continuing significance to the company. Distell's distribution network in Africa is a key strength. Priority markets are Nigeria, Kenya and Angola, along with Botswana, Lesotho, Namibia and Swaziland.

In the latest in a string of expansionary moves, Distell indicated its intentions to extend further into sub-Saharan Africa in early 2007 by undertaking a joint venture with Scotch whisky producer and brand owner Burn Stewart Distiller.

But beyond Africa is where Distell is looking for a major transformation, aiming to become a "credible global alcoholic beverages company". Pursuing that aim led the group to enter a number of agreements in 2006, which expanded its presence in the Nordic and Baltic regions, North America, and attempted to remedy distribution difficulties in Australia.

With an already strong presence in Finland, Norway and Sweden, Distell signed a new deal with distributor Altia Corporation in 2006 to become the exclusive supplier of South African wine to the Finland-based company. Euromonitor International expects this tie-up will exploit Altia's leadership position across the Nordic region and help to achieve Distell's goal of extending into the Baltic States.

Distell immediately followed this agreement with another new deal in early 2007 that is set to boost its presence in the Netherlands, the largest wine export market for South African wine after the UK. The agreement with Baarsma Wine Group Holding (BWGH) involves the Dutch distributor handling Distell's flagship wine brands, namely Fleur du Cap, Durbanville Hills, JC le Roux, Two Oceans and Drostdy-Hof. It also gives the South African company more balanced exposure across a range of channels, including supermarkets, specialists and the on-trade, and across a range of price points.

This expansion outside the UK, the key European market for South African wine, demonstrates Distell's concern that the South African wine category is primarily price-driven in the UK, and the company has indicated that this is "something we're neither good at nor involved in".

However, in an attempt to secure a stronger presence amongst the UK's major retailers Distell has opened larger offices in Middlesex, and signed a new distribution agreement for the UK with distributor Waverley TBS. This has resulted in a recent listing with the supermarket retailer Waitrose, adding to listings for the company's Savanna cider brand with Tesco, Somerfield, Spar and Threshers stores and Nando's restaurants. The Savanna cider brand was reported to have doubled its UK sales in the 12 months to the end of February 2007 compared to the same period in 2006.

In a drive to build a stronger profile for its Two Oceans wine brand in North America, Distell strengthened ties with national US distributor A.V. Imports giving the brand listings in mid-west, mid-Atlantic and southern states. Two Oceans enjoys particular strength in Canada, where it is claimed to be the top-selling South African brand, with sales up over 22% to 115,000 9-litre cases in 2006, according to Euromonitor International.

Back in 2005, Distell signed a deal with Brown-Forman which saw the US drinks group take on the Durbanville Hills range. The recent liberalisation of distribution in the US, allowing wine producers to ship out-of-state directly, offers considerable opportunities for those who select their distribution partner wisely. Brown-Forman's European operation also sells Durbanville Hills in the UK.

The liqueur brand Amarula Cream remains one of Distell's leading performers globally, and as such the company is making its global development a priority. Among its strongest growth markets are North America, Brazil and Germany. Although in global terms the brand is dwarfed by Diageo's Baileys Irish Cream, Amarula sold an impressive 625,000 cases in 2005 and recorded double-digit volume growth for international sales in fiscal 2006.

Distell's key markets outside South Africa include Canada, Denmark, Ireland, the Netherlands, Sweden, Taiwan and the UK. With its business now appropriately structured and assuming that the rand stabilises, Euromonitor International believes that Distell is in a good position to grow its key markets in the future.