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Send  Share  RSS  Twitter  01 Sep 2011

MANAGEMENT: KWV Says Cheers To Loubser


Recent Western Cape Business News

A good CEO – like a really good wine – probably needs more than four years to mature.

Thys Loubser, appointed CEO of Paarl-based liquor group KWV in early 2007, may have needed a few more years to bring his plans to fruition.

Last month Loubser resigned at KWV, perhaps – some observers suspect – because new main shareholder, Hosken Consolidated Investments (HCI), believes the under-performing business needs a major shake-up to release its profit potential.

At the time of going to press CBN picked up rumours that KWV’s performance to the end of June 2011 would not be pretty. In fact, suggestions are that KWV has slipped back into the red – which perhaps is not that surprising considering the state of international markets where the company plies its export trade and the strong rand.

But did Loubser do much wrong at KWV. As far as CBN can see Loubser – who was not unfamiliar with tough trading situations as a former boss of SA Nylon Spinners – did all the basics right.

Loubser’s consumer-centric model simplified KWV’s cumbersome operating structure, shed efficient assets and joint ventures and made key management changes (especially on the brand side). He also reinvigorated the brand range (most notably bringing in Café Culture), and at the time of his resignation KWV had ‘refreshed’ its Lifestyle range with a new look and new name.

If talk is to be believed, Loubser was also set on taking KWV into the ‘ready-to-drink’ space.

If anything Loubser – and KWV’s financial results will bear this out – did not cut into the businesses operating costs. A number of observers have pointed out that KWV is ‘run rich’ compared with its far more profitable (and larger) Stellenbosch rival, Distell.

Loubser really seemed to enjoy his tenure as CEO, and perhaps it was being immersed in KWV’s century old culture that perhaps precluded taking an axe to costs.

As at the end of December 2010 the company’s gross profits of R130 million were wiped out by promotion, marketing and distribution costs of R97 million and operating and administrative expenses of R40 million.

HCI has appointed its own man, Andre van Veen, as acting CEO. Whether Van Veen or a new appointee runs KWV it will be most interesting to see how HCI intends grappling with the cost issue.

Aside from the cost issue there are various ‘legacy assets’ – some prime properties, the brandy stocks and the much reported art collection – that could be sold.

It’s not like KWV – which underwent a rights issue when still under the influence of PSG’s Zeder – needs to raise fresh capital.

But perhaps HCI thinks it’s time to grasp the nettle at KWV. Shedding the trappings of luxury would help reinforce a ‘lean and mean’ ethic at KWV, and the shedding of the links to past could also provide a nice windfall for a special dividend to shareholders.

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