Behind Distell's massive restructuring plan

Distell, a JSE listed multinational brewing and beverage company, recently announced plans to undertake a major restructuring of its multi-tiered ownership structure to create a clearer and simpler shareholding structure. The company's headline earnings for the year were down 3.6% to 1.6 billion. Richard Rushton, the managing director at Distell, shared insights on the restructuring plan in an interview with CNBC Africa. Rushton highlighted the intention to collapse the Cape Town Holding structure and list a new entity, 'New Distell,' to streamline the shareholding process. This move will establish a single point of entry into Distell stock and increase the free float to nearly 37.5% of the shares in issue. The restructuring aims to facilitate easier access for investors and enhance Distell's ability to grow its business effectively. The success of the restructuring plan hinges on the support of shareholders, with a minimum requirement of 75% approval at both the Cape and Distell AGMs scheduled for the 27th of October. Rushton expressed confidence in securing the necessary votes, citing the backing of major minority shareholders like the Public Investment Corporation and Coronation. Despite a challenging consumer environment in South Africa, Distell has seen an increase in volumes, driven by a diverse product portfolio that caters to various consumer preferences. Rushton acknowledged the ongoing consumer pressure due to economic difficulties but emphasized the company's resilience across different market segments. He believes that Distell's product range, including ready-to-drink brands like Bernini, Savannah, and Hunters, as well as wine and mainstream spirit portfolios, positions the company well for sustained performance. Beyond the South African market, Distell is keen on expanding its presence across the African continent. The recent acquisition of the Kenya Wines Agency has made Distell the majority shareholder in the company, reflecting the company's broader strategy to capitalize on growth opportunities in key African markets. Rushton underscored the importance of markets in East Africa, West Africa, and Angola for the premium ready-to-drink brands and wines. In addressing concerns about the decline in headline earnings, Rushton reassured shareholders about the company's long-term prospects. While the majority of Distell's revenue and profits still come from South Africa, the company is focusing on bolstering its market share locally while exploring growth avenues in other African markets. Rushton reiterated Distell's commitment to long-term investments and expressed confidence in the company's growth potential. Despite facing intensifying competition from multinational beverage companies in South Africa, Distell remains optimistic about its ability to thrive in the market. The company's versatile product offerings cater to evolving consumer preferences, especially in segments like wines, spirits, and ciders. Rushton emphasized Distell's adaptability and resilience in the face of competitive pressures. With a clear vision for simplifying its shareholding structure and expanding its footprint in Africa, Distell is poised for a new phase of growth and transformation under the leadership of Richard Rushton.