KWV recently announced the sale of its German subsidiary Eggers and Franke to GmbH, which already distributes KWV’s successful Golden Kaan range. The sale of the company forms part of CEO Thys Loubser’s business transformation plan.
“The holistic business transformation of KWV consists of five pillars, one of which is ‘fit and trim’,” explained Loubser. “When we identify a problem, we either fix it or sell it off. In the case of Eggers and Franke we decided that owning and controlling a distribution and sales company in Germany wasn’t ideal for us.
In the previous financial year and Franke made a R26 million or R27 million loss. Even though they doubled volumes between 2005 and 2006, we couldn’t add volume fast enough to grow the company sufficiently. We needed a larger entity in Germany to be in a better position to facilitate growth. For the past seven years we’ve had a highly successful partnership with Marcus Moller-Racke, who encouraged us to sell our 87,5% shareholding in Eggers and Franke to Racke.”
The deal, in the making since October 2005 and worth R83 million, will give KWV access to the expertise and volumes of Racke, which has a very strong presence in the German chain business. Racke in turn requires an expanded product and distribution base in Germany and Europe, especially at the upper end of the market and in the gastronomic trade, which and Franke can supply. The new entity, known as Racke/and Franke, will be based in Bremen. The aim is to make it the most efficient and largest wine distributor and importer in Germany.
Moller-Racke said Golden Kaan grew internationally more successfully than any other brand that owns or partly owns and gives the assurance that KWV products will be looked after, even though KWV no longer owns the company. “Golden Kaan has brought to Racke and KWV a new vision of what global wine marketing is about,” he said. “KWV and Racke are already connected through 45 markets. We plan on expanding our horizons far beyond the current situation.”
The new company will provide a channel to the market for the KWV, Laborie and Golden Kaan brands. ‘What’s more,” said Loubser, “the deal gives us a far cleaner balance sheet and shareholders can rest assured that we’ll find lucrative ways to invest the profit.” – Sonja Burger
