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Chapter 6

Call of the grape

The beginnings of the new investment company that would become Rupert’s vehicle for gaining access to the liquor industry were modest, as was the case with tobacco. The starting capital of TIB was a mere £5 000, but within three years it grew into the parent company of the Rembrandt Group, by then worth £1 million. By the time TIB reached the £100 000 mark Rupert became its managing director. Before that he had repaid Voorbrand all the money he had earned there and also returned to the RDB, in the form of Voorbrand shares, an amount of £700 he had been paid as salary.

On the establishment of TIB in 1943, Dirk Hertzog said to Rupert: ‘Anton, our first little venture [Chemiese Reinigers] wasn’t exactly a failure, and I trust you and can after all lend you my name.’ These words were quoted in the first edition of Tegniek (Technology), the Afrikaans business magazine started by Rembrandt that would later become Finansies & Tegniek (with an English counterpart, Finance Week) in the Naspers stable. Tegniek was in its own right an important attempt to provide Afrikaners with insight and information about business life, as Afrikaans newspapers published almost no business news in those years, not even stock exchange prices. Business news aimed specifically at the Afrikaans business community came mainly from Volkshandel, the magazine started by JG (Kaalkop) van der Merwe from Heilbron in the early 1940s.

For the first three months of the Ruperts’ marriage they lived with Huberte’s mother and stepfather in Krugersdorp before moving to Johannesburg where they rented a furnished flat in Joubert Park at fifteen guineas per month, half Rupert’s salary. Later they moved to 59 Auckland Avenue, a suburban house in Auckland Park, where they stayed until their move to Stellenbosch in 1946.

At one stage the couple shared the flat with Rupert’s younger brother Jan, then a clerk with a law firm in the city. The commercial artist Kobus Esterhuysen, from whom TIB rented an office, also moved in for a while − he had to sleep on the balcony. Esterhuysen, the brother of Joubero Malherbe, grande dame of the South African music world, was the designer of the country’s bank notes and also did freelance work for Voorbrand.

The office Rupert rented from Esterhuysen had only the most basic furniture and no telephone. When AGMs were held, chairs had to be borrowed to seat everybody. During the first year there was no money for directors’ fees or salaries. Huberte was for a long time the unpaid secretary, typist, clerk and messenger. Rupert’s principle was: ‘As long as we don’t have our own capital, we have to avoid costs.’ Huberte was a thrifty housekeeper and for many years made her own clothes − later their children’s as well until Hanneli was five years old. But as children of the Depression, they did not mind living frugally. ‘We knew that where one lives has nothing to do with the quality of one’s life,’ she said about those early days.1 ‘What did worry us, however, was that Anton should make something that produced no profit.’

Huberte saw her role as that of Anton’s helpmeet, companion and sounding board. ‘When he had a problem, he’d tell me about it. I’d listen and then he’d go out and solve it. The main thing was, I was in it with him. I learned the business from the inside.’

In the stimulating atmosphere of Johannesburg her life was a buzz of friends from different walks of life, entertaining Rupert’s business associates and − in between spells of unpaid office work − a job as secretary at a girls’ high school, Hoër Meisieskool Helpmekaar, and freelance work for the South African Broadcasting Corporation (SABC).

Huberte was to maintain her close involvement in Rupert’s business enterprises over decades. At an early stage in Johannesburg she was offered a position at Voortrekkerpers at a salary higher than that of her husband’s. She declined the offer, however, ‘because I had to work for Anton for free, and I knew their set-up. But everything one accomplished was an adventure.’

TIB was registered on 16 March 1943 and would eventually develop into a company with diversified interests in tobacco, liquor, coal mines, wool brokers, tea and coffee. Contrary to what is sometimes told in business circles, Rupert already started to diversify at a very early stage in his career.

The entry of Rupert and his partners into the liquor market − the second depression-proof product − was prompted by the rather poor performance of Voorbrand as a result of wartime constraints and, perhaps, over-reliance on Afrikaner sentiment. Rupert realised that the highly competitive tobacco industry would not give them enough of a foothold in industry. They had to look wider, also southwards.

In September 1943 he and one of his co-directors, Coenie (Oupa) Kriel, started making inquiries. In October they travelled to Paarl in the Western Cape where they met Canzius Pretorius, accountant of the Koöperatiewe Wynbouersvereniging (KWV). He advised them that the only way to enter the liquor industry would be to buy a Cape company, Forrer Brothers. With the aid of the company auditor, Roux van der Poel, they negotiated the purchase of a 50% interest for £17 500.

In the north of the country money for capital expansion was scarce on account of the failure of institutions such as Kopersbond and Spoorbondkas. Rupert therefore started selling five-shilling shares to the more established, wealthier community in the Western Cape, notably the wine and export grape farmers, who would become the mainstay of his business empire. His investors were all Afrikaners; nobody else was interested.

De Wet Theron of the farm Montpellier near Tulbagh, who had previously been a wine expert at the KWV where his father, Hennie, was chairman, assisted Rupert in his recruitment drive. Among the earliest investors who put their trust in Rupert were Frank le Roux and Paul Roux of Paarl, founders of the KWV.

Rupert had to divide his time between business interests in Johannesburg and Cape Town, a thousand miles to the south. For three years he commuted, mainly by rail. In one year he spent 63 nights − more than two months − on bunks in train compartments. He had sold his little DKW after a shop owner in Linden, Johannesburg, studying the battered jalopy, observed: ‘Rupert, I won’t be able to do business with you.’ Eventually he replaced it with a second-hand Studebaker. But by then he had crisscrossed the winelands in the DKW in the company of De Wet Theron, selling shares to leading farmers in those fertile valleys.

In early 1944 the outstanding debt on the purchase price of the Forrer Brothers’ company still stood at £9 000, money Rupert did not have. This was not an unusual situation for an entrepreneur; contrary to popular belief, entrepreneurs are often not people who start off with ample supplies of money or have access to big capital. They are rather enterprising individuals who spot opportunities and strive passionately to exploit them. Nevertheless, times were hard at a stage that Huberte has described as a ‘dark period’ in their lives.

On 29 January 1944 the Ruperts were in Cape Town when they learned that Anton’s mother had died the previous night at a hospital in Port Elizabeth, where she was due to have a heart operation. She was only 50. They left for Graaff-Reinet immediately. Fuel was rationed and they had no coupons left. At Oudtshoorn Jurgens Schoeman, a businessman and farmer who was one of Rupert’s directors, filled their tank and they managed to reach Graaff-Reinet in time for the funeral. On the way they stopped for a while so Huberte could, as she put it, ‘finish crying’: she had loved her mother-in-law dearly, describing her as ‘a lovely woman’. They also discussed what to do about Rupert’s youngest brother Koos, then only fourteen. The moment they arrived in Graaff-Reinet, Koos hugged Huberte and asked: ‘You’re taking me with you, aren’t you?’ Huberte reassured him. He would come to live with them. After the funeral Rupert returned to Cape Town to attend to unfinished business. Huberte stayed behind to make the necessary arrangements for her and Koos’s departure for Johannesburg.

A few days after his mother’s funeral Rupert was booking into a hotel in Paarl when a report in the afternoon newspaper caught his eye: his good friend and staunch supporter Jan de Kock of MTKV had died tragically. He and the chairman of MTKV were crossing a flooded low-level bridge when their car was swept away by the torrent and they had both drowned. De Kock was the one who had shown such confidence in Rupert’s unproven ability when Voorbrand was founded. To Rupert this was a double blow, losing both his mother and one of his best friends in the space of week.

Less tragic but nonetheless distressing was the news soon afterwards that his accountant and friend Daan Hoogenhout was resigning from Voorbrand to go farming in Botswana. That venture folded after a year and Daan returned to the fold, this time as accountant of the latest venture, Distillers Corporation. In 1948 he was to return to the tobacco group.

But 1944 started badly for Rupert. And he still had to find the £9 000 to pay the Forrer Brothers. The day in March when the money was due Rupert addressed a group of wine farmers at De Doorns in the Hex River valley, known for its export grapes. ‘I showed them a few labels for wine bottles and sold them my ideas. I sold them a dream,’ he said afterwards.2 His dream earned £11 000 in TIB shares within a couple of hours. It was one of the closest shaves of his career up to then. He drove back to Cape Town via Wellington and Bainskloof − the Du Toits Kloof Pass had not yet been built – and before closing time the money was in the bank. That evening he made his first long-distance call ever to Huberte to share the glad news. She treasured the memory, a memento of comradeship.

Rupert, who has prized loyalty so highly throughout his career, would never forget the support he received in the 1940s from the wine farmers in particular. This loyalty and continued involvement in an industry that yields relatively small returns compared to the management attention devoted to it would again be strongly manifested during the restructuring of the South African liquor industry in 1979.

In due course, the farmers’ investment in TIB shares would prove to be an investment of a lifetime. Several Rembrandt shareholders from the early years became millionaires, some multimillionaires. The wealth of quite a number of other affluent Western Cape families, thus to a large extent also the prosperity of the region itself, rests on the foundation of Rembrandt shares. One farmer at Paarl bought £2 000’s worth of shares for each of his four children. Shortly after the turn of the century each child’s shares were worth R132 million. At the De Doorns gathering, which had saved Rupert’s skin that autumn morning in 1944, a woman bought shares for £500. In 2001 her son told Rupert that his mother’s investment had secured him and his sister a comfortable retirement.

Someone who later regretted not having bought shares was Piet Meiring, the South African head of information Rupert had consulted in Johannesburg about the festival newspaper he published during the Great Trek centenary. Meiring was especially regretful as he and Dr Hendrik Verwoerd were plunged into debt in the war years as a result of two business ventures in which they had been involved as co-directors, a garage and a market agency delivering market produce to housewives. ‘Extravagance and mismanagement led to the failure of the two enterprises, with Dr Verwoerd and I as sureties at the bank, ’ Meiring wrote in his memoirs. They owed R50 000 each to Volkskas and Sasbank. The banks were lenient and wrote off part of the amount, but Meiring had to sell his car and some of his paintings to redeem the debt.3

The affair also left a mark on Verwoerd, who was accommodated by the banks through the mediation of Fritz Steyn. Rupert is convinced that this financial failure led to Verwoerd’s hostility towards capitalism. ‘He was prejudiced against the business sector because of his own negative business experience.’ One of the consequences was that the policy of separate development Verwoerd later wanted to extend as prime minister, failed, among other reasons, because he did not want to allow white capital in the black homelands.

In its first years TIB was spreading its wings, selling shares and acquiring new enterprises. Soon its capital was fully subscribed, paving the way for further share issues and expansion. But the big breakthrough came in March 1945, when TIB − acting as trustee of Union Distillers SA (Pty) Ltd on behalf of a company still to be floated − bought the land, machinery and equipment of an insolvent Stellenbosch company, South African Farm Products Protective Association Limited, for £25 000. The price at that time was quite steep, but it secured seven hectares of prime land on the outskirts of the picturesque university town. On 11 June 1945 Distillers Corporation was registered, the first Afrikaans company to be listed on the Johannesburg stock exchange.

The first board of directors of Distillers was constituted as follows: SA (Sidney) Schonegevel (the company’s first chairman, for twenty years), Anton Rupert (managing director), Dirk Hertzog, CC (Oupa) Kriel, JJ (Jurgens) Schoeman, JF (Freddie) Kirsten, PC du Toit and FS (Fritz) Steyn. In a memorandum in which he reacted to criticism that the board was controlled by the National Party, Dirk Hertzog wrote: ‘There was no NP connection and, what’s more, there were SAP members on the board.’4

Distillers started with a substantial capital of £1 300 000, divided into 2 200 000 ordinary shares of ten shillings each and 200 000 preferential shares of £1 each. The share issue was soon oversubscribed − further evidence of the wine farmers’ confidence in Rupert. From within the industry, however, criticism of the new player with its eight liquor stores ranged from vehement to venomous. The editor of the KWV’s journal Wine and Spirit observed somewhat viciously that he found even the criticism strange, ‘as we know that businesses without prospects of a future are usually left severely alone; left to their own fate.’ He also criticised the leadership of the new company’s use of Afrikaans: ‘Why they should continually refer to the Afrikaans origin of the company, they alone know.’

For Rupert there was a good reason to use Afrikaans in addition to English. True to his roots and imbued with the desire to prove that Afrikaners could succeed in industry, he has never been ashamed or hesitant to fly the flag for Afrikaans. He also had another motive: to champion the predominantly Afrikaans wine farmers’ right to proper recognition. And he wanted to promote estate wines, a dream that would occupy him for most of his life and that would also lead to the Ruperts’ involvement in estates that produce quality wines.

In the initial years there was not much he could offer the wine farmers, who were naturally aggrieved by their marginalised position in the industry. As one of them put it, the wine trade was in the hands of ‘whisky drinkers who stood wine bottles upright on liquor store shelves’.

Rupert’s conviction that such people had no respect for wine was a major reason why he started promoting estate wines, and why he wanted the wine farmers to receive the honour due to them. His first estate wines were from the farms Montpellier, Theuniskraal and Alto. He also introduced the French and German custom of appellation contrôlée in South Africa, that is, labelling wines as products of a specific estate and its vineyards.

‘It was an interesting marketing strategy,’ he says. ‘It drew the farmers into the industry and put their names on the map.’ By 1946 about twenty wine farmers had joined the umbrella organisation for estate wines that became known as the Bergkelder (Mountain Cellar). Among the best known of these pioneers were Andries Jordaan of Theuniskraal, Tulbagh; De Wet Theron of Montpellier, Tulbagh; Manie Malan of Alto, Stellenbosch; Baron von Carlowitz of Uitkyk, Muldersvlei; Danie Roux of Provence, Franschhoek; P Bruwer of Mont Blois, Robertson; and P Beyers of Riversmeet, Groot Drakenstein. It was not until 1972, however, that estate wines gained general recognition and legal protection in South Africa.

Another astute move of Rupert’s was to push up the shelf prices of good estate wines. When Paul Sauer, later a cabinet minister and owner of a top Stellenbosch wine farm, Kanonkop, chided Rupert for this, his response was: ‘Look at the wines people order when they entertain. They buy foreign wines because they’re more expensive. They don’t want to appear mean by offering their guests cheaper wine.’

Distillers started under very difficult circumstances. The immediate post-war period was a time of scarcity, with both money and goods hard to come by. Building materials were sold under a government-imposed quota system.

Rupert’s new company had to make do with old buildings left by the bankrupt company. The only proper structure comprised a large room and four small partitioned offices. Three of these were occupied by Rupert, his secretary J van R Maartens and Daan Hoogenhout; the fourth accommodated a few clerks, including Fanie Botha, later minister of labour. Rupert managed to secure a permit to purchase building materials to the value of £5 000, which had to be used to build essential facilities like tanks and a laboratory. Undercover working accommodation was a secondary consideration and a luxury cellar unthinkable. Open-sided sheds were constructed to provide some shelter. They were walled in gradually as bricks became available.

An early setback was the rationing of rebate brandy by the KWV, which had instituted quotas for proof spirit for the liquor industry based on past purchases. So although Distillers had initially envisaged 40 000 gallons a year, on account of rationing it was allocated only 9 000 gallons based on its takeover of the much smaller Forrer Brothers. For all its healthy capital investment and processing facilities Distillers was ‘all dressed up and nowhere to go’, as Dirk Hertzog put it in an internal memorandum. ‘It took sweat and toil to do business successfully despite these constraints imposed by the state.’5

Distillers had to relinquish some 80% of its allocated quota of proof spirit to the older, more established companies like Castle Wine and Brandy. The wheel came full circle in 1969, however, when the Oude Meester Group, an offshoot of Distillers, took over this giant company.

Rupert’s obsession with quality made up for constraints with regard to supplies and infrastructure. From the outset Distillers concentrated on producing quality brandies, of which Oude Meester was but one. In 1949 Distillers outranked all other South African companies at the Empire Wine Exhibition in London. This feat was repeated in 1950, the year in which Oude Meester was named the best brandy produced in the British Commonwealth. Rupert had personally designed the famous Oude Meester trademark for Distillers. Later he also proposed the name Amarula for the cream liqueur that became a worldwide favourite.

Huberte Rupert often visited the cellar and showed visitors around. At that stage there was no glass factory in the Cape that produced bottles, so they had to avail themselves of used ones. Bottle cleaning was a major operation, conducted just outside the laboratory. It was not a prepossessing spectacle for visitors. So Milton, the gatekeeper, would give a few shrill blasts on a whistle whenever Huberte and her visitors arrived. This was the sign for the bottle-washers to vanish into the cellar, leaving access to the laboratory unobstructed.

Within the company Distillers’ personnel relations attested to Rupert’s personal values. Despite the growing number of employees, he kept his ear close to the ground and shared their well and woe, in a sense honouring the ethos of earlier, more intimate family businesses. Huberte was very much involved in this aspect of her husband’s career.

Soon after he became Distillers’ wine technologist in 1946 Alfred Baumgartner, a German who hailed from Swakopmund in present-day Namibia, was under threat of deportation to Germany as a hostile alien. Awaiting the dreaded deportation order, he and his wife had already sold most of their possessions and kept only their beds and five suitcases. Huberte, deeply moved by their plight, offered to look after their three children and return them to their parents once they had found their feet in war-ravaged Germany. But eventually Baumgartner, father of the Stellenbosch artist Regine Kröger, was not deported and in 1948, when the Malan government took over, the family was granted permanent residence. But the Ruperts’ generous offer earned their lasting gratitude and Baumgartner’s lifelong loyalty to Rembrandt.6

There are many such stories of assistance to employees, such as the case of Annies Breytenbach’s wife Loretta who needed eye treatment that was not available in South Africa at the time; she was sent abroad at the company’s expense. On one occasion a female employee told Huberte that married women were not members of the pension fund. Huberte wasted no time in having the anomaly set right. She and other company wives arranged Christmas parties with presents for staff and their children, and she personally congratulated employees who excelled at sport in any way. Her view was that as empathetic wife of the chief executive she could mean much more to the staff than she would have been able to accomplish as a career woman with an occupation of her own.

In Huberte’s view, Rupert had the ability to inspire people to achieve beyond themselves, based on qualities like integrity, purposefulness and honesty. ‘The people who worked with him all ended up as inspired, better people, intensely loyal. This is what makes a leader; someone who can achieve this. It is not enough to be entrepreneurs with capital in the bank. Without the human material Anton had around him, people he could inspire, he wouldn’t have been able to accomplish anything.’7

Loyalty would become one of the core concepts of the Rembrandt Group. On the occasion of Rupert’s 80th birthday in 1996, the business journalist David Meades wrote that Rupert gave ‘new meaning’ to the word: ‘It is probably the single strongest building block of his business empire. His people are willing to sacrifice everything for the group.’8

Rupert expressed his own views on character as the most important ingredient of leadership in a lecture given in 1965 that was published in 1967 in his book Leiers oor leierskap (Leaders on leadership). A good manager lives by ‘a code of values that emanates from his ethical and spiritual life’. He singles out loyalty as the quality of character he prizes above all others – ‘the one quality that cannot be bought with money and has to be earned.’

Indeed, Rupert demanded undivided loyalty. For him it began in the family circle. He believed that an unfaithful husband or wife who became disloyal to a marriage partner could also become disloyal towards the group, and how could someone like that be trusted in his or her work? For him, office relationships between married and unmarried staff were a cardinal sin. Everyone in the Rembrandt Group knew that, and a few individuals who transgressed were transferred or went to work elsewhere in the days before the community norms became more accommodating.

Rupert regards loyalty as one of the supreme virtues to such an extent that he relishes an anecdote about himself. Once when he had to handle a difficult situation concerning a colleague, his friend Prof. James Yeats of Stellenbosch told him: ‘Anton, you are too loyal.’ Rupert stood up, walked round his desk and shook Yeats‘s hand: ‘Thank you, Jamie, thank you; it is the biggest compliment you could have given me.’

When married staff of Rembrandt had to go overseas on business their spouses often accompanied them. This was at Huberte’s insistence. She felt strongly that neither partner’s personal development should lag behind: they should share mind-broadening experiences and build their marriages on a basis of equality, with successful marriages also being an asset to the group. When Johann Rupert took over the reins of Rembrandt he continued the policy.

The Ruperts’ humane empathy ensured a committed workforce. In 1997 their son Johann, testifying before the Truth and Reconciliation Commission, could claim a staff turnover of only two percent over more than 50 years.9

Loyalty was one of the factors that helped Distillers as well as the later Rembrandt to go from strength to strength. Another contributing factor to his business success was Rupert’s ability to be ahead of his competitors as far as scientific innovation was concerned. A trained scientist himself, he constantly exploited new technologies as they became available.

Distillers’ first technical manager, the Berlin-trained perfectionist Gerhard Schröder, quickly established a laboratory despite the rather primitive conditions. Schröder left most of the laboratory work to Alfred Baumgartner, who had obtained his doctorate in plant physiology summa cum laude at the University of Freiburg. In Baumgartner’s opinion Rupert could not have had anyone better than Schröder: ‘Gerd Schröder was married to Distillers. He never rested until a task had been completed to perfection and he was always prepared to be on duty at any hour, night or day.’10

As early as 1947 Schröder ordered from France the equipment needed to launch the only modern, fully automated sparkling-wine cellar in the country. Four kinds of sparkling wine were produced under the brand name La Residence.

In 1951, when Rupert first heard about cold or ‘controlled’ fermentation, a process devised by the German Wilhelm Geiss in California, Distillers immediately ordered four high-pressure tanks from Germany. With state-of-the-art equipment and stringent quality control they were able to produce wines of standardised, predictable quality for the mass market. Popular brands like Grünberger Stein with its distinctive flagon (modelled on the Bocksbeutel used by the Franks in Germany) and Kupferberger Auslese are still top sellers today.

As in the case of tobacco, Rupert initially marketed a wide range of brands to suit all tastes. Some were competing with each other, a technique he often followed since it kept everyone in the group on their toes. In the end, however, they reduced the number of brands, concentrating on the top sellers − household names like Oude Meester and Richelieu brandy, Old Master medium sherry, Theuniskraal Riesling and Stellenheimer Rooderust, La Residence sparkling wine and liqueurs like Van der Hum and Amarula.11

While a success story was unfolding in the liquor industry, the dramatic expansion of Rupert’s tobacco empire as well as a controversial beer war lay ahead.