South African wine company Distell Ltd, which is locked in a fierce court battle with the Kenya Wines Agency (Kwal) has accused the later of owning it 3.7 million shillings ($44,000) in breach of contract. Distell is also challenging the authority of Kenya’s High Court over the dispute in which it has been sued by Kwal, which is partly state-owned.

Last month, Kwal obtained a court order restraining Distell Ltd from terminating an exclusive production, bottling and distribution agreement that the two firms entered into in 1998. The agreement gave Kwal exclusive right to source raw materials, blend, produce and bottle in Kenya Distell’s Count Pushkin brand.

The court has extended this injunction following pleas from Kwal that terminating the agreement would hurt its business which earned 60 percent of its revenue from the products. The dispute involves 54 brands including, Viceroy, Castle Brand Aperitif, Clubman Punch, as well as distribution of Amarula and wine brands Drostdy-Hof and Cellar Cask.

Through a Kenyan law firm Anjarwalla & Company, Distel has filed a notice of preliminary objection challenging the authority of the High Court in Nairobi over the dispute. The matter was adjourned until October 2.

Distell wants to server relations with KWAL and set up its own operations to bottle its products locally and manage distribution and marketing of its brands. This is expected to intensify the battle between SABMiller which has a 29 percent stake in Distell and its rival the East Africa Breweries Limited (EABL) over control of the Kenyan alcoholic beverages market.

“Tying in the association between Distell & SABMiller, in our view, the move by Distell – to set-up its own operation to manage its product distribution and marketing, appears like the start of a grand assault on EABL,” said a research paper by Standard Investment Bank quoted by The Star newspaper.

South African SABMiller recently re-entered the Kenya market through the acquisition of Crown Beverages which distributes its Castle lager and Redds brand.

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