In this month's Just the Answer, Gary Greenfield, managing director of Distell Europe, talks about South Africa's largest drinks company's international aspirations, not only for its flagship wine brand Nederburg but also for the liqueur Amarula Cream and Distell's South African cider Savanna.

J-D: Last month, one of just-drinks' columnists suggested the South African wine sector is overshadowed by Constellation's Kumala brand. How do you respond to that charge?

Greenfield: It's not incorrect to say that we haven't established Nederburg in the UK as a major brand. But I think the company is working very hard at positioning Nederburg to become a heritage brand in this market. If you look at the top ten (South African) brands (in the UK), I can't think of one that's not a concept brand. Nederburg has the credentials and the heritage. It's a wine that's over 300 years old. It has a manor house, it has a home, it is the most awarded wine in South Africa, and it's a household icon. That doesn't mean to say it's an instant win on the international market. We've been doing a lot of work to figure out what we need to change about the offering.

It's only in the UK that Kumala leads the South African wine sector. They are expanding into the US and Europe. Now that it's part of Constellation, yes, potentially it's going to be huge. On the one side, it's good for a South African brand to do well to heighten awareness of South Africa in all those markets. On the other hand, it'd be good to have a brand that has a heritage in South Africa. Kumala was developed internationally by a British company. We all agree that it's been a phenomenal success, but we would prefer it if one of our heritage brands would do well.

J-D: So what are your hopes for the UK market?

Gary Greenfield

Greenfield: We've just changed our route-to-market. Now that we've teamed up with Waverley TBS, which has on- and off-trade sides, they're going to give us the exposure, and we're going to work with them to develop a proposition for the market that works. Recently, we've got listings in Morrisons and Waitrose for Nederburg, and this is just the start. This is where you build from, showing the retailers that you are a big power and have the resources to support them. We plan to do some serious research within the next year to see what works and what doesn't work in this market.

On the one side, the South African category is in decline, in the region of 10% down on the previous year. A lot of people think that's the correction from Kumala: the (Kumala) price increase - they are the majority of the market here - has led to some sort of stagnation, so the growth is not there. And some of the other brands are not performing that well. But we hope this is a short-term blip. We also believe that the higher end of South Africa is starting to do better. That's where everybody's trying to focus. You need a core offering at a popular price point, but then you need to build the diversity above that. Nederburg has multiple tiers, but you've got to start somewhere and build up as the consumer gets to know the brand.

J-D: Looking further afield, how is Distell performing in other markets?

Greenfield: We're not necessarily the biggest South African player in the UK, but we are the biggest in Africa. We do well across Europe, we are one of the biggest exporters in the country, and we have a concerted focus to grow our international business - that's our main focus at the moment.

The UK is our third largest European market behind Sweden and Germany. In Sweden, we've developed good quality and value-for-money offerings. In Germany, Nederburg is number three in volume and probably number one in value. It's at a significantly higher price point than the leader. Canada is also very successful for us, where Two Oceans is the number one South African brand.

J-D: Distell also owns the liqueur Amarula Cream. How is it doing?

Greenfield: Amarula Cream is a good success story for us. Germany has just become our number one European market for Amarula, followed by the UK. In the UK, it's the only premium liqueur that's growing, according to Nielsen. We're really happy about that. In terms of volume, it's the second largest cream liqueur in the world. We're a long way behind Baileys, but we are still a challenger. It's got a global positioning. Our tagline is 'The spirit of Africa'; it's a unique product, made from a fruit only grown in sub-Saharan Africa.

J-D: And what other brands are you pinning your hopes on?

Greenfield: Internationally, on the wine side we have five global drive brands - Nederburg, Two Oceans, Drostdy-Hof, Fleur du Cap and Durbanville Hills - while the only spirit we export outside of Africa is Amarula Cream, although we're busy with some brandy projects. In Africa, we have 70% market share for brandy, so we're looking at developing brandy internationally.

The other brand that we're starting to invest in is our Savanna cider brand. It's always been in the UK market, but we're also choosing two or three European countries we'd like to focus on. Our tagline is 'Experience the difference'. It comes from South Africa, it's made from Granny Smith apples, it's in a clear bottle and you drink it out of the bottle with a slice of lemon in the bottleneck. We're developing above-the-line campaigns and promotional tactics within the UK while increasing distribution. We hope to introduce some above-the-line advertising in the next calendar year. So we're looking at Scandinavia and either Germany or Italy, as well as Canada for the future.

J-D: Distell must be a very tempting acquisition target for other drinks companies. Does that concern you at all?

Greenfield: Looking domestically, Distell has around 45% market share of wine, 70% of brandy, 75% of sparkling wine and 85% of fortified wine. It's a totally dominant player, with the exception of the basic wine sector. Amarula is the jewel of the crown because of its international appeal. If somebody was looking holistically at investing in the local market, obviously our company would be of interest. But if people wanted to cherry-pick brands, Amarula would be the focus.

Would they be prepared to take on a company with the infrastructure we've got? In South Africa, we do our own production, bottling and distribution. This is all done in-house without any sub-contracts. We have 4,000 people in the company.

We've had two years of excellent growth. Last year, earnings income grew in excess of 30% and this year it was 23%. I'd imagine our shareholders - the Rembrandt Group (REMGRO), SABMiller and then the public - are particularly happy with the performance of the company. With the dividend income, I'd think they're quite happy. Whether they'll be prepared to sell isn't something I'd be able to comment on.