KWV’s Red Heart deal one step closer

Red Heart Rum is set to be acquired by Warhsay Investments, trading as KWV, after the Competition Commission approved the transaction. 

KWV is one of South Africa’s most valuable alcohol brands. While strongly associated with brandy, the company also owns historic wine estates such as Laborie in Paarl. 

The company is one the largest farmers in South Africa, sourcing its grapes from over 50 farms in the Western Cape. 

Founded in 1918, KWV has played an important role in South Africa’s economy and politics. 

In 1924, the government passed the KWV Act, limiting the exporting and importing of surplus alcohol to the company. 

KWV grew rapidly throughout the 20th century, leading the transformation of South Africa’s wine industry into a global player. 

The company united disparate wineries under one brand, giving it the advantage of scale and the ability to compete with much larger European wine farms. 

In 1997, the company lost its privileged position under the KWV Act, and the import and export of alcohol was opened to competition. KWV lost its cooperative status as a result.

KWV celebrated its centenary in 2018, and while firmly rooted in South Africa, it has penetrated international markets. KWV now boasts a global footprint with a portfolio of brands in over 100 markets.

It has had a tumultuous history with its larger rival, Distell, which bought KWV during Apartheid before it was forced to sell it in 2003 by the Competition Comission. 

The sale was forced as part of the Commission’s requirements for allowing the merger of Distillers and SFW, forming Distell. KWV remained a shareholder in Distell until 2009 when it began to unbundle non-core assets.

Since going alone, KWV has worked hard to diversify its revenue away from its historic brandy and wine brands. This has also led it to compete with beer giants South African Breweries and Heineken in the fast-growing ready-to-drink market.  

As part of this, KWV announced its intention to purchase Red Heart Rum from Pernod Ricard SA. 

Pernod Ricard SA is ultimately controlled by its French spirits giant, Pernod Ricard. The latter owns brands such as Absolut, Ballantine’s, Beefeater, and Jameson. 

For completeness, Red Heart Rum and Red Heart Gold Rum fall under the Red Heart Rum brand.

The Commission has approved the proposed transaction whereby KWV intends to acquire the Red Heart rum brand and related assets of Pernod Ricard SA without conditions.

The Commission is of the view that the proposed transaction is unlikely to substantially lessen or prevent competition in any market. The proposed transaction does not raise significant public interest concerns.