Heineken reviews SA wine business 3 years after $2.4 billion Distell deal

Heineken NV, a premier Dutch multinational brewing company, is reviewing its South African wine business just three years after acquiring Nederburg, JC Le Roux and other labels through its €2.2 billion ($2.4 billion) purchase of Distell Group Holdings, raising questions about the future of the brewer’s expanded drinks portfolio as it seeks to restore growth in the market. 

The brewer is assessing the role of wine in its South African operations, Chief Financial Officer Harold van den Broek told analysts Wednesday. He said the company was not rushing into decisions but was actively discussing how to compete in certain wine segments with its local management team. He did not disclose the options under consideration.

Wine brands face pressure 

The review comes as Heineken struggles to revive wine sales in South Africa, even as beer and ready-to-drink volumes posted double-digit growth in the third quarter. Van den Broek said the company was working to bring volumes back, highlighting a performance gap between wine and the faster-growing parts of its beverages business. 

Heineken has not said whether a sale is being considered. However, the review signals a fresh assessment of the portfolio assembled through its acquisition of Distell, one of the largest transactions in South Africa’s drinks industry, which gave the brewer a stronger foothold across wine, spirits and beer.

Distell deal proved difficult 

Agreed in 2021 and completed in 2023, the transaction combined Distell and Namibia Breweries with Heineken’s existing South African operations to form Heineken Beverages. More than 5,400 employees from Distell and Namibia Breweries joined the group, which was intended to strengthen Heineken’s position against rivals including Anheuser-Busch InBev and Diageo. 

The enlarged business subsequently faced integration challenges and market-share losses. In 2023, less than a year after completing the acquisition, Heineken recorded a €491 million ($547.1 million) impairment related to the business. Former Chief Executive Officer Dolf van den Brink later acknowledged that the company had fallen short on several commercial priorities.

New CEO pushes for growth 

The strategic review comes as new CEO Rafael Oliveira seeks to sharpen execution and improve the brewer’s performance against competitors. Heineken reported stronger-than-expected global volume growth in the third quarter, supported by demand in Asia and a recovery in the Americas. Its shares rose as much as 2.2% following the update. 

Oliveira said Heineken had strong foundations but was failing to translate them into consistent growth and stronger consumer relationships. He has called for greater accountability, faster decision-making and better commercial execution, with more details of his turnaround plans expected alongside the company’s full-year results. 

Heineken has lagged rivals Carlsberg and AB InBev in recovering from the post-pandemic slowdown in beer demand, adding pressure to its efforts to improve returns across its businesses. The South African wine review gives the new leadership team an opportunity to reassess which brands and categories deserve further investment.

Wider portfolio under review 

Founded in Amsterdam in 1864, Heineken has expanded to more than 190 countries, with a portfolio of more than 500 beer and cider brands. The group has increasingly relied on licensing and franchise-style arrangements in some higher-risk markets as it adjusts its international operations to local conditions. 

In April, Heineken exited the Democratic Republic of Congo after decades in the country, selling its stake in brewer Bralima to Mauritius-based ELNA Holdings amid conflict-related disruption and a broader strategic shift in Africa. The South African wine review adds another potential change as the company focuses on growth and the performance of its regional businesses.