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Cape Town - Distell’s secret regarding the composition of its Amarula Cream liqueur is out and there is speculation that the liqueur’s image could suffer in the eyes of consumers.
The question was whether Amarula contained marula liquor alone, or whether the popular drink is spirit- or wine-based.
The company’s dilemma arises from a four-year dispute with the South African Revenue Service (Sars) as to the excise duty due on Amarula.
Originally 14 liqueurs were involved in a difference of opinion with Sars.
The matter ultimately landed in the North Gauteng High Court in Pretoria, where a decision against Distell Group [JSE:DST] was given last week. The company now has to pay the tax authority R28m in arrear excise duty.
Over the past couple of days wine journalists have busied themselves not so much with the excise duty due for the liqueur, but with Distell’s attempt to keep secret the composition of its successful drink.
From the correspondence between Distell’s legal team and the office of the public prosecutor in Pretoria, it appears that on more than one occasion Distell asked for Amarula be kept out of court.
In correspondence from the office of the public prosecutor dated December 17 2010, it is alleged that Distell, in a letter dated June 12 2009, had again requested that Amarula not form part of the legal action.
The public prosecutor’s letter goes on to say that this request was based on the fact that consumers would regard any public litigation involving Amarula Cream as negative, and this would lead to huge losses, both locally and internationally.
The letter says that for Distell to appeal successfully against Sars' determination of the new excise category for the product the company will have to prove that Amarula Cream is neither a liqueur nor a spirit-based product, but a wine-based aperitif.
This is a product class that is generally regarded as being inferior to spirit-based drinks such as liqueurs.
Various wine journalists reckon this has become a headache for Distell because the use of wine as a base for Amarula would not make it taste any different from other drinks, but might surprise consumers.
Dr Gert Loubser, a scientist involved with Distell and Amarula, confirms that there is no difference in the taste of liqueurs made in the different ways. He said that from the outset there has never been any deviation in the method of making Amarula, and consumers can rest assured that what they see on the shelf does not differ from the product on offer over so many years.
What does however raise the ire of wine journalists is the fact that for the global market Amarula is indeed spirit-based, but that wine is used for the local market to pay less excise duty.
Estimates show that in 2009 Distell sold about 345 000 cases of Amarula, 276 000 of which were on the local market.
Last year Fifa accredited the product as one of two official alcohol products during the World Cup soccer tournament.
- Sake24
For business news in Afrikaans, go to Sake24.com.
The question was whether Amarula contained marula liquor alone, or whether the popular drink is spirit- or wine-based.
The company’s dilemma arises from a four-year dispute with the South African Revenue Service (Sars) as to the excise duty due on Amarula.
Originally 14 liqueurs were involved in a difference of opinion with Sars.
The matter ultimately landed in the North Gauteng High Court in Pretoria, where a decision against Distell Group [JSE:DST] was given last week. The company now has to pay the tax authority R28m in arrear excise duty.
Over the past couple of days wine journalists have busied themselves not so much with the excise duty due for the liqueur, but with Distell’s attempt to keep secret the composition of its successful drink.
From the correspondence between Distell’s legal team and the office of the public prosecutor in Pretoria, it appears that on more than one occasion Distell asked for Amarula be kept out of court.
In correspondence from the office of the public prosecutor dated December 17 2010, it is alleged that Distell, in a letter dated June 12 2009, had again requested that Amarula not form part of the legal action.
The public prosecutor’s letter goes on to say that this request was based on the fact that consumers would regard any public litigation involving Amarula Cream as negative, and this would lead to huge losses, both locally and internationally.
The letter says that for Distell to appeal successfully against Sars' determination of the new excise category for the product the company will have to prove that Amarula Cream is neither a liqueur nor a spirit-based product, but a wine-based aperitif.
This is a product class that is generally regarded as being inferior to spirit-based drinks such as liqueurs.
Various wine journalists reckon this has become a headache for Distell because the use of wine as a base for Amarula would not make it taste any different from other drinks, but might surprise consumers.
Dr Gert Loubser, a scientist involved with Distell and Amarula, confirms that there is no difference in the taste of liqueurs made in the different ways. He said that from the outset there has never been any deviation in the method of making Amarula, and consumers can rest assured that what they see on the shelf does not differ from the product on offer over so many years.
What does however raise the ire of wine journalists is the fact that for the global market Amarula is indeed spirit-based, but that wine is used for the local market to pay less excise duty.
Estimates show that in 2009 Distell sold about 345 000 cases of Amarula, 276 000 of which were on the local market.
Last year Fifa accredited the product as one of two official alcohol products during the World Cup soccer tournament.
- Sake24
For business news in Afrikaans, go to Sake24.com.
