By John Oyuke

Running battles have broken out between two beverage giants over control of local alcohol market.

Kenya Wines Agency (Kwal) has won the first round, obtaining a court order restraining Distell Ltd – a South African wine producer – from terminating an exclusive production, bottling and distribution agreement that the two firms had entered into and which has been in operation for years.

The High Court in Nairobi issued interim orders on Wednesday stopping Distell from terminating the agreement or allowing its local subsidiary – Distell Wine Masters – to distribute the products in Kenya pending determination of the suit.

Following the order of temporary injunction Kwal continues to distribute wine brands of the South African company pending determination of the case fixed for inter partes hearing - “between the parties” – tomorrow.

Under the agreement Kwal has handled bottling and distribution of several spirits brands, including Viceroy, Castle Brand Aperitif, Clubman Punch, as well as distribution of Amarula and wine brands Drostdy-Hof and Cellar Cask. 

The wines helped the government-owned Kwal to stay afloat in the highly competitive spirits and wines business.

Justice Erick Ogolla, who issued the injunction, also barred the South African company from advertising or making public announcements in the media or otherwise purporting to have terminated the exclusive production, bottling and distribution agreement between the two beverage giants.

The Judge ordered Kwal to serve the South African company with the order through the media and by courier.

Previously, Kenya had appealed to the South African firm to reconsider its intention to terminate the agreement.

Through Kwal’s managing director Edwin Kinyua, the government wrote to Distel on June 18 requesting it to be patient as Kwal was being privatised.

Kinyua said the delay in the privatisation process was caused by the non-existence of the board of directors of the privatisation commission, adding that appointment of the board was almost complete.

But in a letter dated June 21, the South African firm said its interests would be served better if it directly managed its products in the region. The firm said it could no longer cope with delays and uncertainties on Kwal’s privatisation.

“In the interests of our own stakeholders, we believe we can no longer delay the pursuit of our long-stated strategic objective,” wrote Mr Jan Scannel, Distel’s Group MD.