Kwal wins first round against SA wine firm
Posted Friday, July 27 2012 at 19:02
- Court allows Kenya Wines Agency to continue distributing Distel’s wine brands
A local wine distributor will continue to distribute popular wine brands of a South African company pending determination of a court case.
Kenya Wines Agency (Kwal) has obtained a court order restraining Distel Ltd — a South African wine producer — from terminating an exclusive production, bottling and distribution agreement that the two firms had entered into.
As a result of the agreement, Kwal has been the sole distributor of Distel’s products, including Viceroy, Amarula, Castle Brand Aperitif and Cellar Cask.
The wines helped the government-owned Kwal to stay afloat in the highly competitive spirits and wines business.
The High Court in Nairobi issued interim orders on Wednesday stopping Distel from terminating the agreement or allowing its local subsidiary — Distel Wine Masters —to distribute the products in Kenya pending determination of the suit.
Justice Erick Ogolla, who issued the injunction, also barred the South African company from advertising in the media an announcement purporting to terminate the distributorship agreement.
The judge ordered Kwal to serve the South African company with the order through the media and by courier.
The orders were given after Kwal moved to court on Wednesday through an urgent application. The hearing will be on July 30.
Previously, Kenya had appealed to the South African firm to reconsider its intention to terminate the agreement.
Through Kwal’s managing director Edwin Kinyua, the government wrote to Distel on June 18 requesting it to be patient as Kwal was being privatised.
No board of directors
Mr Kinyua said the delay in the privatisation process was caused by the non-existence of the board of directors of the privatisation commission, adding that appointment of the board was almost complete.
But in a letter dated June 21, the South African firm said its interests would be served better if it directly managed its products in the region. The firm said it could no longer cope with delays and uncertainties on Kwal’s privatisation.
“In the interests of our own stakeholders, we believe we can no longer delay the pursuit of our long-stated strategic objective., wrote Mr Jan Scannel, Distel’s Group MD.
Kenya’s Finance Minister Njeru Githae had directed the Executive Director of the Privatisation Commission to prioritise privatisation of Kwal.