Nairobi — One of the oldest names in Kenya's wines and spirits industry, Kenya Wine Agencies Ltd, is under pressure to sell shares to a strategic equity partner.

The EastAfrican has learnt that the company's largest business partner and main supplier of alcoholic beverages, MS Distell (Pty) of Stellenbosch, South Africa, is putting pressure on the company to bring on board a strategic equity partner to inject new capital into the business.

The South Africans have reportedly threatened that they may be forced to review their future relationship with KWAL if it resists opening its shareholding to new investors.

It is understood that the South Africans have also indicated a willingness to buy into the company.

Presently, KWAL sells a number of Distell brands, including Amarula, DrostdyHof Cask wines, Chamdor, Savannah, Kalahari Thirst, Scottish Lader and Consulate Gin, which are imported into the country as finished products, while others such as Viceroy brandy, Count Pushkin Vodka, Castle Lager, Clubman Mint Punch are manufactured locally under licence from the South Africans.

The Trade and Industry Ministry told The EastAfrican that the souring relations between the company and its key partner had been brought to the attention of the government.

Consequently, the government has advised that the matter be handled urgently to obviate the instability which KWAL is likely to endure in the event of the South Africans pulling out.

Away from the limelight, the Privatisation Commission has already made a decision to fast-track the process of identifying a strategic equity partner to safeguard KWAL's business.

According to sources, a transaction adviser for the deal is to be procured in the next three months with instructions to set in motion the process of valuing the company's business and selecting suitors.

KWAL was started in 1969 as a joint venture between the government, through Industrial and Commercial Development Corporation, and private investors.

Its share are currently held by the ICDC (72.6 per cent), Centum (25.9 per cent), and local private investors (1.38 per cent).

Recently, the company announced that it would spend Ksh300 million ($4.5 million) in coming months to recapture market leadership it lost in the 1990s.

It said it would spend Ksh100 million ($1.5 million) to renovate its wine factory and Ksh200 million ($3 million) on expanding its local and international market and distribution network.

Managing director Gerald Masila said KWAL had embraced change and was repositioning the company to regain leadership in the marketplace, and expand its footprint into the East African Community and Comesa.

Mr Masila said plans were underway to start selling pre-mixed beverages, otherwise known as ready-to-drink.

"We are keeping our finger on the pulse in the alcoholic beverages market to ensure we give consumers value for money and the highest quality," he said during the launch of the Vina Ventisquero wine brand from Chile.

He said the company manages a portfolio of over 400 international and local brands comprising wines, whiskies, vodkas and vermouths.

Some of the brands are imported from their countries of origin, others are produced locally and KWAL bottles some locally under licence.

Mr Masila said the wines' prices are attractive and he believed this would give KWAL an advantage in the market.

KWAL started operations in Rwanda in November 2003 by setting up the first duty free shop at Kigali International Airport.

It has recently completed plans to set up a branch in Kampala, Uganda.