/ 2 August 2004

Vincor buys Western Wines

Vincor International, listed on the Toronto Stock Exchange and one of North America’s largest producers of wine and related products, has acquired the shares of UK-based privately held Western Wines, the largest independent wine importer and distributor in the United Kingdom and the largest importer of South African wines to the UK, in a deal valuing Western Wines at 133-million pounds.

The acquisition is one of the very first by a large international wine group of a primarily South African wine supplier, and could signal the beginning of a trend in a fiercely competitive global wine market currently awash with supply.

Western Wines, which started in the UK in 1980, is best known for its successful Kumala range, which it created in South Africa in 1995 and has expanded from 36 250 cases of wine in 1996 to importing about 3,5-million cases in 2003. Kumala is South Africa’s largest selling brand in the UK, and Western Wines sells more than one of every three bottles of South African wine sold in the UK.

The company, which focuses on importing wines from South Africa, Italy and Chile, has a turnover of about 97,5-million pounds, of which 60% comes from its South African operations. It produces its Kumala wines in partnership with Origin Wines, a local company based in Stellenbosch, but also imports South African wine brands from African Terroir, Douglas Green Bellingham, Villiera and Origin Wines.

It has a portfolio of approximately 400 brands, divided between owned brands, agency brands and private label products. It estimates that it has about an 8% share of the total UK off-premise (retail) market in wine sales, and total volume is expected to rise by 15% to 6,4-million cases in 2004.

Vincor paid 84-million pounds for the business and assumed 49-million pounds in debt for an aggregate enterprise value of 133-million pounds. – I-Net Bridge