"It is a very fine balance between high level and detail, because you can't be high level without understanding the detail first."
Logic, simplicity and a focus on what they do well; that is what Lucas Verwey feels he has brought to Distell since he joined from Investment Holding company, Remgro. “This job is much more hands-on. It is about rolling up your sleeves and empowering the team. It’s a very dynamic role where I find myself in the centre of anything that goes on at Distell,” says the Group FD.
Similar to the current Group MD, Lucas was not part of building the original Distell. “Being separated from the legacy helps with the speed of changes that need to be made,” says Lucas, who was nominated for the 2017 CFO Awards. “With a fresh set of eyes, I can bring a new and refreshed perspective. My belief is: people need to be responsible and think for themselves. For me, simplicity, logic, empowering people and value-based principles are crucial for Distell’s success.”
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Distell owns best-selling brands like Savanna, Hunters, Nederburg and Klipdrift. From the start, Lucas had his work cut out by bringing a fresh perspective to its large portfolio of hundreds of brands to ensure returns were optimal and the company played to its strengths. “Focus and simplicity were desperately needed,” says Lucas, during the conversation with CFO Magazine and Standard Bank CIB’s Rato de Mendonca, Head of Clients in the Western Cape.
Turnaround specialist
Lucas grew up in Bloemfontein, where his father was a partner at accounting firm PwC. Throughout his career he has been a turnaround specialist, working mostly in Cape Town and London on M&A, due diligence projects, accelerated integrations and first-100-day-plans. After running his own distribution business before an oil & gas focused stint at KPMG, he joined Johann Rupert’s investment group Remgro in 2008.
Before getting his hands dirty in the Group FD role at Distell, he already had sat on the board as alternate non-executive on behalf of Remgro for nearly two years getting to know the company well. This prepared him for his appointment in 2014 to move into a strategic role before replacing Merwe Botha as Group FD a year later.
Since he started as Group FD, Lucas has overseen crucial projects such as the implementation of its shared services centre (The Hive), built new management planning/reporting systems and routines to enable better insights, implemented SAP in both Distell International (formerly Burn Stewart) and Taiwan, refinanced the group’s debt and played an integral part in some of the recent M&A activities - eyeing the African market to double its revenue and profit. “We did all those change projects at the same time. In hindsight we should have picked fewer, but we learnt a lot nonetheless,” he says.
Enthusiastic and pragmatic
Lucas comes across incredibly relaxed given some of the pressure him and the team have been through at Distell, dealing with issues such as the current drought in the Western Cape and the potential impact on its business. “You have to be enthusiastic and pragmatic about what you do. Hopefully that rubs off,” he says, when asked what type of leader he is.
“The team should not be built around me, but around a structure. I do the hard work together with the team and make myself accessible. I’m grateful to have a very strong team around me, although you can’t delegate everything. It is a very fine balance between high level and detail, because you can’t be high level without understanding the detail first. You also need to allow people to fail falling forward, as our Group MD Richard always says.”
One of the biggest projects Lucas has been responsible for has been the implementation of a 150-people strong shared services centre in Tyger Valley, away from the traditional corporate home in Stellenbosch as part of a concerted effort to be able to attract more diverse talent. The centre was implemented by James Wilkinson, last year’s winner of SAICA’s Top 35 under 35.
Shared services
Lucas says The Hive, as the centre is called, comprises of procure to pay, order to cash, hire to retire and record to report processes for the beverage company, which employs 5,000 people. “It is fascinating to see. It is exceptionally high-tech, and the new way of working is designed as one flow, like our processes. I am very proud of it. It is a massive change for the business and this is only one piece of the finance transformation on which we have embarked. We have also decided to focus our brand portfolio and consolidate our supply chain alongside this. The goal is to take R500 million out of the cost base to re-invest in people and brands.”
Although The Hive is about cost saving, efficiency and a leaner organisation, it is also about the proper use of technology and data, says Lucas, who also oversees this portfolio. “IT is where everything in the business intersects. For around 60 percent of every project we do, technology is at the centre, whether it is a salesforce handheld, printing on a truck, automating warehouse, reporting systems or implementing fingerprint security. The team, headed up by Corlia van Zyl, is doing a phenomenal job.”
With most change projects completed, the nature of the CFO role is changing too, Lucas observes. “The pendulum is swinging to an outward focus and my role is becoming more strategic. It is evolving from the ‘spoeg en plak’ project management that it was, to more of a business partner to the CEO, helping to validate and soundcheck decisions.”
Logic and numbers
A calm, unfazed demeanor surely helps achieve maximum influence in the boardroom, which suits Lucas. “Sometimes it takes months, but logic and numbers always prevail. If I’m trying to understand an issue, I don’t go in like a bull in a china shop – I prefer to lean on simple logic. As finance, we play an integral role as a business partner to the the rest of the business, for example when looking at expansion into Angola, we recalibrated our ambitions to a pay-as-you-go approach. It still gave us the benefits of future upside but managed the risk that operating in Angola brings.”
Distell operates in a global market, with variable FX fluctuations and increased competition in the ciders market. “We need to fight with what we do best, with extra emphasis on the mainstream end,” says Lucas. “Our 4th Street has been the fastest-growing wine brand in for some time. We are now recruiting wine drinkers in the taverns,” says the FD, adding that the company has doubled its number of drop-off points in townships over the last few years. “Hopefully we can take those customers on a journey to more premium brands.”
Thirst in Africa
Distell’s eyes are now set on quenching a growing thirst in other African countries. “We do have a big role to play in South Africa and need to be responsible, as we have the majority of the local wine and cider market and contribute R7 billion in alcohol excise annually to SARS, but our main inorganic thrust is M&A into Africa.” The acquisitions and integration of Best Global Brands (BGB), which operates in Angola and Nigeria, and Kenya Wine Agencies Limited (KWAL) are already starting to pay dividends.”
Distell introduced new ways of working and new systems at KWAL and with a new CEO, managed to improve margins from four percent to 12 percent in a short space of time. “We are buying, integrating and changing these businesses. Currently, 15 percent of our revenue comes from Africa, approximately R1 billion. Our plan is to grow that to a much larger contribution by 2021. The continent has the best demographic in the world in terms of growth prospects. Of course, Africa comes with its challenges, but it’s the last untapped continent and building upon our experience.”
“These big decisions are all intricately linked to finance: understanding the business, with the owners and team. It is a big portion of my time. It also creates exciting new opportunities for Distell people to expand and develop themselves. If we grow, they grow!”
This article first appeared in CFO Magazine.
