Distell,  owner of brands such as Klipdrift, Savanna, 4th Street and Bain’s, could retrench about 100 employees as part of the restructuring of its supply chain network, it said on Monday. 

The changes, which entails closure of some of the company’s operations, as well as increased capacity at other sites, is meant to improve efficiency and unlock growth potential for the listed producer and marketer of wines, spirits, ciders and other ready-to-drink alcoholic beverages. The company has over 4,000 employees.

“We have identified our supply chain as a key enabler of Distell’s growth ambitions, particularly in the current business environment. In our quest to build a customer centric, sustainable and effective supply chain, we continue to explore opportunities to increase capacity utilisation, drive efficiency and extract cost benefits from our supply chain,” Distell supply chain director Johan van Zyl said.

Distell announced plans to scale down manufacturing activities at its Green Park operation in Cape Town, by relocating the bottling and processing activities at the plant to other existing Distell operations such as Adam Tas in Stellenbosch and to operations in Gauteng.

Van Zyl said the move was part of the company’s strategy to move bottling activities closer to market.

He said the scaling down of operations at Green Park would affect about 800 employees. The company had, however, created a total of 550 new positions at its facilities in the Western Cape and another 150 in Gauteng.  Van Zyl said the number of employees affected by forced retrenchments could be less than 100 if its other employees within the group took up its offer of voluntary retrenchments to older staff.

The additional jobs in Gauteng follow changes to the existing facilities in Wadeville and Springs. For instance, the company announced the addition of wine blending and so-called bag-in-box capability at the Wadeville manufacturing operation.

Van Zyl said the changes were meant to improve supply-chain reliability and customer service. He said the company’s manufacturing and distribution network was historically fragmented and cumbersome.

“We had operations in places which were not closer to the market. It was a competitive disadvantage. We are confident that we are taking the right steps to optimise our supply-chain network and improve our competitive edge,”  he said.

In addition to improved manufacturing asset utilisation, the changes would reduce fixed overhead costs, working capital and energy and water usage. Van Zyl however declined to quantify the cost savings, saying the company was in a closed period as its results for the six months ended December 31 were due soon.

Distell shares were down 0.92% to R116 on Monday.