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Chapter 7

Rembrandt: birth of a masterpiece

Rupert’s study of world markets as well as his own observations during the Depression had convinced him that ‘tobacco and liquor had the best growth potential because I noticed during the depression of the Thirties that people didn’t smoke less and, if anything, they probably drank more’.1 Undaunted by the unsuccessful attempts of Voorbrand to produce cigarettes for this lucrative market, he persisted in pursuing his dream of manufacturing cigarettes. The Rembrandt Tabakvervaardigingskorporasie van Suid-Afrika Beperk (Rembrandt Tobacco Manufacturing Corporation of South Africa Limited), in which Voorbrand was taken up, was founded in 1946. As a whole the group concentrated on tobacco and liquor because of the growth potential Rupert saw in these markets, but also because the first shareholders were mainly wine and tobacco farmers.

In the initial years Rupert devoted himself more to the tobacco interests while Hertzog mostly attended to the liquor interests. Hertzog tended to keep a lower profile – it was better that way, he often told friends and relatives, as a team could only have one captain: ‘Anton is the masthead.’

The shift in emphasis represented by the name Rembrandt was an important innovation in its own right. Rupert gave much thought to a new name: ‘As much labour (thinking) goes into a good name as into the whole product.’ He knew that Voorbrand was not suitable for the cigarette with which he wanted to conquer the world market; especially not the choosy Afrikaner market that tended to mistrust its own. He was contemplating Cigarette Cézanne when one night he dreamt about Rembrandt’s paintings. When he woke up, he knew instantly what the name of his company would be, and roused Huberte to share his brainwave. ‘We were so excited, we never thought about sleep again,’ she recollects. ‘We made tea and talked till daylight. Both of us knew the name was spot on.’

Rembrandt was a name with universal appeal and a symbol of quality, with the emotional force of the works of Rembrandt Harmenszoon van Rijn (1606-1669), the greatest painter of his time and creator of the world-famous Nightwatch that hangs in the Rijksmuseum in Amsterdam. As a name, Rembrandt was immediately recognisable and easily pronounceable in both Afrikaans and English and other world languages. And it had no sectional overtones.

Rembrandt was to benefit greatly from a brilliant move Rupert had made even before the formation of the group. Towards the end of 1945 he went on his first overseas business trip, in search of the necessary machines and to make arrangements to obtain essential technical services. In England he met Sydney Rothman, head of the celebrated tobacco house Rothmans of Pall Mall, and concluded a strategic agreement that would have far-reaching consequences.

The 29-year-old Rupert, who was then still based in Johannesburg, had become friendly with Gordon Douglas, head of Rothmans’ South African agency. Douglas was of great help to Rupert in the early years. With a view to the young Afrikaner’s overseas trip, he briefed him on the finer details of travelling an international businessman had to master, such as tips for chambermaids and at which hotels to stay. Douglas also wanted to propose Rupert as a member of the exclusive Rand Club, regarded as the canteen of the Chamber of Mines and with a membership of wealthy English businessmen and mine-owners. Although Rupert, with names like Anthony Edward, would probably have been accepted without any difficulty, he declined the offer politely, explaining to Douglas that he could not become a member of a club where someone like the respected Afrikaner industrialist Dr Hendrik van Eck was not welcome.

In October 1945 Rupert boarded a BOAC airship for the trip to London that lasted six days and six nights. Flying low over the vast African continent, he was awed by its grandeur and unspoilt natural beauty. It was just two months after the nuclear explosions in Japan, which weighed heavily on his mind. Large cities in Europe and Britain had been flattened. With such powers of destruction at its disposal, humankind had to see reason or it faced extinction. Imperialism and colonialism, he concluded, were dead. Africa was moving towards a new, independent future. His view of Africa from the air, coupled with the realisation that humanity had acquired the power to destroy itself, strengthened his conviction that coexistence had become imperative – between humans, but also between humans and nature.

‘The era of paternalism, where everything had to be done for others, had failed. In future, success could only be achieved if one planned and acted together with others. The time of doling out fish to the hungry was past. It had to make way for an approach of teaching them to fish. Hence the concept of coexistence through partnership,’ he said in a magazine article.

On his arrival in war-ravaged London, Rupert phoned Rothman’s office to confirm the appointment he had made from Johannesburg. He was told that Rothman could only see him in ten days’ time. Rupert replied that he had a four-day booking at Grosvenor House, the Mayfair hotel where he was to occupy the same suite on all his visits to London over the years (just as he would remain a client of the same bank, Volkskas, and the same insurer, Sanlam, for many years). If he could not see Rothman within those four days, he would have to go home. Rothman checked his diary again and arranged to meet Rupert that same afternoon at four o’clock.

The meeting with Sydney Rothman was in many respects a watershed event. That afternoon, Rupert entered into an agreement with Rothmans of Pall Mall to manufacture Rothmans’ brand in South Africa in exchange for technical expertise. They clinched the deal with a handshake − a formal contract was not signed until 1948, when the first cigarettes had been produced in the factory in Paarl.

Rothmans became the company that provided Rupert with technical advice. In the typical fashion of a true entrepreneur, he would go to immense lengths to obtain the right advice. He appointed people who could complement his own entrepreneurial abilities and established networks at an early stage.

Rothmans’ technical advice proved invaluable to Rupert, as Sydney Rothman had grown up in the tobacco industry. His father Louis, a Russian Jew who had been born in the Ukrainian capital Kiev, had learnt the trade as a young boy in a cigarette factory owned by his father and uncle. Louis Rothman immigrated to London in 1887 and by 1890 was making cigarettes in his spare time. His outlet was a small Fleet Street tobacconist. In 1900 the innovative retailer moved to Pall Mall, which became a world-famous brand name he had registered. The inventor of mentholated cigarettes, Louis Rothman was given the royal imprimatur − ‘By appointment to His Majesty the King’ − in 1905. Sydney became an apprentice in his father’s business in 1919 and, in 1923, a partner. Rothmans was listed on the London stock exchange in 1929. Among its regular clients were the media mogul Lord Northcliffe, the British premiers Lloyd George and Winston Churchill, and King Alfonso of Spain.

Rupert’s journey home was ill-starred. The airship came to grief on the Nile and the passengers were stranded in Khartoum for six days before they could return to Cairo. In Cairo he was told there was no room on a flight to South Africa for the following week, also not for the two weeks after that, perhaps in two months’ time. Only VIPs like generals could get preference. As an insignificant young Afrikaner, he was well and truly stuck. In desperation he decided some gallantry might do the trick. Recalling that the woman behind the counter at the airline office was past her prime, he bought a magnificent bunch of roses in a street in Cairo, and had it delivered to her. ‘I was on the next flight back to South Africa,’ he later told a group of amused Pretoria commerce students.

It was by no means all plain sailing in the founding years of the Rembrandt Group. Before Rupert’s departure for London TIB had a bank balance of £120 000, proceeds of an issue of ten-shilling shares sold at 12s 6d. It was agreed that any financial transactions after the listing had to be approved by two of the three TIB directors − he, Dirk Hertzog and Fritz Steyn, then a lawyer in Johannesburg. On Rupert’s return to Johannesburg he was notified by Jan Hurter, accountant and later managing director of Volkskas, that shares had been bought back and their account was heavily overdrawn − would they please do something about it? Rupert was astonished. Dirk Hertzog was equally in the dark. It turned out that Fritz Steyn had bought back shares, issued shortly before at 12s 6d, at 16s 3d on the advice of a broker to support the price – allegedly to maintain Afrikaner prestige! Rupert could only describe this as ‘sheer nonsense’. In his view, ‘the prestige lies in establishing the company and then in doing good business.’

Although the company was not insolvent, it had suffered a significant setback. It took a long time to pay back the overdraft. Rupert said afterwards that the episode had taught him a big lesson: ‘Always make sure you get the right advice.’

One important consequence of this misfortune was that in 1946 they formed a second investment company, Tweede Tegniese en Industriële Beleggings (Second Technical and Industrial Investments), later to be renamed Tegniese Beleggingskorporasie (Technical Investment Corporation) or Tegkor for short. This was again Rupert’s inventive plan to raise cash and to help TIB meet its obligations regarding the take-up of further shares in Distillers. Investments were spread over a range of industries: tobacco (Voorbrand and Rembrandt), wool (Wolgroeiers Afslaers Beperk), coffee and tea (Theal Stewart and Biesheuvel Eiendoms Beperk), and coal (the Klipfontein group of companies). The upshot was a pyramidal structure with the Ruperts and Hertzogs in overall control. Rembrandt Beherende Beleggings (Rembrandt Controlling Holdings), in which Tegkor had a 40,6% interest, retained 51,1% in Rembrandt Group Ltd. At the top of the pyramid was Rembrandt Trust (Pty) Ltd, in which the Hertzogs had a fairly small 5,6% interest compared to Rupert’s lion’s share of 80 to 90%. The Rembrandt Trust became the basis of his wealth, but also the reason why in later years he bought or sold virtually no shares on the open market − his view was that whatever he did could influence the market.

In 1946 TIB vacated its Johannesburg headquarters − by then they had moved to the Volkskas building, where they had two vermin-infested offices with few amenities − and the entire staff moved to Distillers’ premises in Stellenbosch. These were still under construction, the windows unglazed. Most of the staff members were later transferred to Ou Rosenhof across the road in Dorp Street, with Rupert retaining his office at Distillers, until the new Rembrandt building was ready.

Rupert preferred the peaceful, rustic environment of the university town of Stellenbosch to the hustle and bustle of city life. In the late 1940s the town had only some 12 000 residents, 2 400 of them students. Yet it was conveniently close to Cape Town’s airport, where he could catch international flights.

The Ruperts would eventually become one of Stellenbosch’s most famous assets, in certain respects even more widely known than the university. With Rupert and Rembrandt becoming synonymous with Stellenbosch, he also turned the name of this tranquil Western Cape town into a world-famous trademark.

Their first home was in Thibault Street in the suburb of Mostertsdrift, where their eldest son − Johann Peter, after the family’s Prussian progenitor − was born in 1950. Soon afterwards they moved to no. 13, diagonally across the tree-lined street, where they would live for the rest of their marriage. Here the younger children, Anthonij Eduard and Hanneli, were born in 1952 and 1955 respectively.

The dusty pink, double-storeyed house on the bank of the Eerste River cost them £6 100 (R12 200) at a time when Rupert decided to invest in a home rather than further shares; he held that a managing director should not surround himself with debt. At the turn of the century he pointed out humorously that if he had bought shares for the same amount instead, they would have been worth R300 million by then − so the family home was perhaps the most expensive in the South Africa!

The house is situated on a large stand with a swimming pool, but it is in no way ostentatious like some of the sumptuous palaces of the mega-rich. The two silver-grey Mercedes cars are parked in a lean-to carport. Indoors there are cosy armchairs, a bookshelf reflecting the occupants’ catholic tastes, antique furniture, Persian rugs and paintings by well-known artists collected over many years. The atmosphere radiates relaxed comfort and the Ruperts’ sober lifestyle.

To have lived in the same house for such a long time is something they have in common with some of the world’s top entrepreneurs. The American billionaire Warren Buffet, ranked second on the 2004 Forbes list of 500 richest people in the world below Bill Gates of Microsoft, has spent decades in the same grey stucco house in Omaha, Nebraska. Known as the ‘Oracle of Omaha’, Buffet is also the only American businessman Rupert met who had studied Rembrandt’s business in depth. Another renowned entrepreneur, Henry Ford of Model-T fame, lived in the house he had built for him in Dearborn, close to his automobile factory in Detroit, Michigan, from 1915 until his death in 1947.

In Thibault Street, the Ruperts maintained their simple, sober lifestyle. ‘What do you do with a larger and larger and larger house?’ he said 50 years later. ‘What do you do with these things? It’s boring. It doesn’t actually make me happy. I need to help create.’2

Huberte made their home a peaceful haven from the stressful world of business. She kept a close eye on the family’s diet, establishing a vegetable garden and serving fresh fruit and vegetables. Lunch was the main meal of the day. During their school days the children often came home to salads − grated carrots and apples soaked in orange juice, also tomatoes and pineapple. Annie Booysen, the family cook for over 40 years, conjured up plain, tasty dishes. Thick vegetable broths were often served for supper. Huberte believed it kept Rupert healthy and made him sleep well. He never had stomach ulcers. They rarely dined out and steered clear of formal functions whenever they could. Huberte kept up her interest in music and the theatre and attended performances with friends.

When the Ruperts first settled in Stellenbosch, the town was still mostly dominated by academics. In the somewhat cliquish community the newcomers were initially treated like outsiders and late arrivals, except by a few shareholders who became good friends. One of their first friends was Prof. James Yeats of the university’s law faculty, a former Rhodes scholar who had co-authored some of the most important Afrikaans law books with Prof. JC de Wet at Stellenbosch. Yeats, who also became a director of the Rembrandt Group, took them under his wing. He introduced the Ruperts to academics and other residents and they were gradually drawn into the community.

A number of academics with whom the Ruperts enjoyed intellectual conversations provided stimulating company. Among those who lived close by in Mostertsdrift were CGW Schumann, the economist who would later describe Rupert as ‘a practical dreamer and a realistic idealist’; Len Verwoerd, agriculturist brother of HF Verwoerd (ideologically poles apart from his brother); the literary scholar FEJ (Fransie) Malherbe, whose brother Prof. F du T Malherbe had been Rupert’s chemistry lecturer in Pretoria; and the composer Arnold van Wyk. Dirk Hertzog and his wife lived nearby at Rus Roes in Tuin Street, across the road from the poet Dirk Opperman and his wife Marié, friends of both the Ruperts and the Hertzogs, whose house was at no. 3 Thibault Street. Although Rupert’s brothers Koos and Jan spent much time overseas, they also made Stellenbosch their base and lived in the same area. In later years Mostertsdrift and specifically Thibault Street became less affordable to academics, and by the turn of the century the residents of the suburb were mostly business people and medical doctors.

As a location for the new cigarette factory Rupert chose an old mill in Paarl, a town in the Berg River valley. He thought the climate ideal for maturing tobacco and manufacturing cigarettes. It was to this valley that Jan van Riebeeck, governor of the Dutch East India Company, had sent an expedition in October 1657. Two hundred and ninety years later Rupert came to Paarl as a new pioneer. Like Van Riebeeck he had a dream, but with it the determination and initiative to turn it into reality.

Rembrandt’s starting capital was a modest £125 000. There were also other problems. Hennie van Zyl, who had succeeded Hoogenhout as manager of Voorbrand, left in 1946 to join the leather-suitcase company SAPRO in Port Elizabeth. Like Hoogenhout, he returned to Rembrandt two years later when his business at SAPRO failed. There were no recriminations in either case. In the interim, however, the only suitable person Rupert could find to take over at Voorbrand was his own brother Jan, newly qualified as a lawyer and working for their father John Rupert. Jan agreed to join Rembrandt and organised the move of the cigarette factory in Johannesburg to Paarl. He crossed over to the new company at the time of the merger, when Voorbrand’s production assets and brand names were transferred to Rembrandt for a sum of £70 000. Voorbrand shareholders obtained a share in Rembrandt, which still continued to process pipe tobacco. Rupert himself was authorised to apply for shares of £70 000 in Rembrandt.

The other co-founder of the group, Dirk Hertzog, was in the early stages still a partner at the law firm Couzyn, Hertzog & Horak in Pretoria. He joined the group in Stellenbosch, where his astute legal brain was an asset, but after a year he wanted to return to Pretoria. An asthmatic with a heart defect, he believed he needed a lot of exercise and the Cape weather interfered with his tennis. His wife Lorraine (née De la Harpe) also found it hard to settle into the new surroundings and missed her friends in the north. After a few years in Pretoria, however, the couple returned to Stellenbosch and Hertzog devoted the rest of his career to Rembrandt. Rupert observed in his founder’s notes that Hertzog, who had taken up golf in the meantime, was rarely available outside of office hours. Hertzog’s own view was that after devoting a full day’s energy and concentration to business, he did not want to be disturbed at home or on the golf course. As a result of a car accident in 1968 Hertzog’s wife became an invalid, which also made it practically difficult for him to travel overseas.

Hertzog had tried to interest Rupert in golf, but after a few attempts Rupert declared frankly that he was only making a fool of himself on the golf course. Years later his older son Johann would become an enthusiastic golfer. Johann Rupert counts golf heroes such as Ernie Els and Trevor Immelman among his friends, serves as chairman of the PGA in South Africa and encourages the development of young golfers.

Two other well-known associates of Rupert’s, JF (Freddie) Kirsten and Fritz Steyn, also left the group at an early stage. Kirsten, a farmer from Paarl, left the board of TIB after acquiring an interest in a liquor store. Steyn resigned as a director of TIB in 1948 after he had laid personal claim to a liquor licence financed by TIB and obtained on behalf of the company, and Rupert pointed this out to him. They parted ways for good and Steyn went on to become a member of parliament, ambassador and judge.

In his chairman’s address of Rembrandt Beherende Beleggings in 1996 Rupert referred to those who came and went in the first ten years, and those who returned and stayed to the end. ‘There are few of us left who had the faith. I think only Dr Stals and I truly believed. We kept on believing that these things were possible; that he who does not believe in miracles, is not a realist.’ Stals, chairman of Voorbrand, became Rembrandt’s first chairman, with Rupert the first managing director. When Stals was appointed to the cabinet in 1948, he was succeeded as chairman by Dr Nic Diederichs. In addition to Stals and Rupert, other members of Rembrandt’s first board were CC (Oupa) Kriel, DWR (Dirk) Hertzog, IM (Ivan Makepeace) Lombard, JH (Jan) Steyn and RL (Roulou) Barry.

Rupert confirmed his high regard for Stals in an article published in Tegniek in September 1950, on the occasion of his mentor’s 70th birthday, shortly before his death in 1951. Stals’s ‘refinement of spirit’ – one of the highest compliments Rupert could pay a person – had left an indelible impression: ‘I have never in all my life encountered someone who, to my mind, is a more perfect, honest, sincere Christian.’3

With the move to Stellenbosch Rupert also linked up with a division of the Afrikaner-Broederbond (AB) in the new environment. Between September 1945 and January 1947 discussions on economic affairs were conducted in the AB in which he participated as one of some 40 members who were representative of the biggest Afrikaans businesses. During this period the earlier debate between a socialist and a free-market approach was concluded with a commitment of loyalty to free-market principles.4

In these discussions, where Rupert argued for the free-market system, he also pleaded for a better understanding between North and South (a division in Afrikaner politics marked by suspicion and distrust that dragged on for many years) and for the bigger institutions to help create circumstances more favourable to the development and growth of the smaller enterprises. As Rupert himself put it, ‘I stated my views’ within the AB where there were great differences on a variety of issues. Among other things, he advocated coexistence.

At a bondsraad meeting of 4-5 October 1956 where the Afrikaner’s economic aspirations were high on the agenda, some speakers proposed a quota system as a ‘powerful instrument’ to ensure a foothold in trade and industry for young and emerging Afrikaans businesses. The executive council of the AB was requested to lobby members of the cabinet to find a basis ‘on which Afrikaner enterprises can be favoured to a greater extent by means of the allocation of quotas.’ Rupert, who delivered one of three papers at the bondsraad, pointed out, however, that an own business style, realism, enthusiasm and loyalty were the most important requirements for success. A second speaker, Dr AD Wassenaar of Sanlam, emphasised that, over and above outside forces obstructing the advancement of Afrikaners, the major obstacles lay in Afrikaners’ own view of and approach to their problems.

The executive council responded ‘rather unenthusiastically’ to resolutions about matters like a quota system, an idea also propagated earlier by Dr Hendrik Verwoerd. Quota systems, which would again figure in the new government’s transformation plans and affirmative action after the ANC came to power in 1994, were scrapped from the executive council’s agenda within a few months after the bondsraad decisions of 1956.5

Rupert gradually saw less need for an organisation such as the AB after 1948, ‘when our own people had come to power’. His father had been opposed to secret societies and never joined the AB, even though his friend Ds Jozua Naudé had been a founder and the first president. John Rupert believed that a secret society always gave rise to machinations and intrigue. His father’s view made Rupert increasingly uncomfortable with participation in the AB; as he put it, it had become ’an absurdity’ and ‘counterproductive’ over time. In the 1960s an AB circular noted that he had only attended two of the year’s monthly meetings of the Helderberg division.6 Eventually his membership lapsed. But he never violated the confidentiality of the organisation, as did Beyers Naudé (a member for 22 years and the chairman of an AB division in Emmarentia) and Albert Geyser (who was never considered for AB membership).

In response to an allegation in Dan O’Meara’s book Volkskapitalisme that ‘the Bond-connection was vitally important to the early development of Rembrandt’, Hertzog wrote in an internal memorandum: ‘The members of the Broederbond, the Reddingsdaadbond and also many other people supported Rembrandt, but it is nonsense to say it was founded by the Broederbond.’ He concluded: ‘Rembrandt met a need at the time to bring the Afrikaner into business life on a sound basis and thereafter became widely known on account of its pioneering work in 50/50 partnership with all the benefits this entailed in terms of international and inter-group cooperation. For this and for the consistently high quality of its products and services Rembrandt will remain known, regardless of the mud flung from time to time by those who have their own axes to grind.’7

Rupert is adamant that membership of the AB was never used as a criterion for appointments. ‘AB membership was to me no reason for preferential treatment.’ It was also his policy not to force anyone in his group to speak Afrikaans. One such English-speaker with whom he would have a long association visited Stellenbosch in 1946 – the London marketing expert Patrick O’Neill-Dunne of Rothmans, for whom a draft contract was drawn up to assist with the marketing of Rothmans’ products in South Africa. Dirk Hertzog recalls how O’Neill-Dunne once commented on their struggle against the mighty UTC: ‘You two boys trying to bash British American Tobacco make me think of two fleas crawling up the back of an elephant with rape in their mind!’8

O’Neill-Dunne was entitled to 2,5% of Rembrandt’s net profit, which also applied to Rupert as the managing director. This led to a far-reaching decision in 1949 that would provide an early foundation for his philosophy as businessman-benefactor. Rupert requested the board to use this 2,5 percent of the net profit to which he was entitled for good deeds and worthy causes, a decision that would eventually lead to numerous philanthropic actions and foundations, as well as important strategic partnerships in the area of social responsibility.

An old flourmill next to the Berg River in Paarl was adapted to serve as the group’s first cigarette factory. In 1947 the first two cigarette machines arrived from Canada, bought with the help of Dawid de Waal Meyer, South Africa’s trade commissioner in Montreal, from a small Dunhill factory that had folded after the war. At the beginning of 1948, as Rupert put it, ‘with two old primitive machines we at last took the plunge to start making cigarettes, with overseas expertise and South African capital.’

The small band of pioneers took the risk of venturing into an industry with a long history. Tobacco smoking dates back to ancient North and South American civilisations. In the 16th century Sir Walter Raleigh popularised pipe smoking at the English court, and in Spain tobacco plants were used medicinally. By the 17th century the use of tobacco had been prohibited in Austria, China, Persia (where a tobacco dealer was burnt at the stake) and tsarist Russia (first offenders were flogged, a second offence meant the death penalty). Still the smoking habit spread. In 1880 two Americans, James A Bonsack and James Buchanan Duke, designed and patented machines to manufacture cigarettes. Especially in wartime tobacco consumption rocketed. During World War I Gen. John Pershing said: ‘You ask me what we need to win the war? I answer tobacco as much as bullets.’ Pres. FD Roosevelt regarded it as essential war material during World War II and exempted tobacco growers from military duty. The non-smoker Adolf Hitler, by contrast, launched the first anti-smoking campaign of modern times in the 1930s and the tobacco rations of Nazi soldiers were restricted to six cigarettes a day.

The cigarette industry was also boosted by the film industry. Ordinary people could not afford the yachts, fur coats and luxury goods displayed by Hollywood stars in films, but they could smoke the cigarettes their screen idols were enjoying so freely. Cigarette consumption rose after World War II and peaked in the 1950s.9 Opposition to smoking started gradually after a 1952 Readers Digest article, ‘Cancer by the Carton’, described the health hazards of tobacco. The American surgeon-general’s first report on smoking was issued in 1964. But it was not till the latter part of the century that measures against smoking and tobacco advertising were introduced internationally − in South Africa only in the 1990s.

The first Rembrandt cigarette was made by AP (Pappa) Thierack, who had met Rupert in 1945 and two years later installed the first steam kettle and standard packaging machines in the old mill. Among those who helped assemble the first cigarette machines were Moos du Preez and James Martin, two coloured workers who would remain with the group for decades. According to Thierack the initial output was 100 000 cigarettes a day. Mrs HJ Muller relates how she sealed the cellophane around the first packet with a flatiron and affixed the first excise duty sticker by hand; ‘after much pondering and measuring, Bakoor Smit then built a machine that consisted of a sewing-machine wheel and a bicycle chain’.10

The first cigarette was taken off the conveyor belt in the factory in Paarl by Dr MS (Tienie) Louw, president of the Afrikaanse Handelsinstituut (AHI), on 4 June 1948. It was still the old format of 70mm, 15mm shorter than the eventual king size. ‘The first Afrikaans cigarette is on the market’, Tegniek reported joyously. The new cigarettes were released on the market a week after Dr DF Malan’s National Party, which had entered into an election pact with Klaas Havenga’s Afrikaner Party, ousted Gen. Smuts’s SAP in the May 1948 elections. Nationalistic feelings were rampant among Afrikaners. Some political analysts contend that the NP’s policy of ‘apartheid’ had been the decisive factor in the new Afrikaner government’s victory at the polls. Others hold the view, however, that far more important factors had been Smuts’s decision about participation in the war that had not been subjected to a referendum, the hardship in the war years after the Depression, discrimination against Afrikaners in the public service and elsewhere, as well as the grievances of ex-combatants who felt Smuts’s promises to them had not been kept. Malan expressed the emotions of many Afrikaners when he said: ‘We feel at home again in our own country.’

At first Rembrandt concentrated on the Western Cape. Wary of overextending themselves, they literally fought their way northwards area by area, creating a demand for the new group’s products. From the Western Cape the outposts shifted to the Southwestern Districts, the Karoo, Namaqualand, the Eastern Cape, Kimberley, the Free State. A year later they crossed the Vaal River to reach Johannesburg, the City of Gold.

Manufacture of Rothmans’ cigarettes under licence, with all the benefits of the overseas company’s technical know-how, forged ahead from 1949 onwards, giving Rembrandt a significant competitive edge. Initially, Rembrandt paid royalties to Rothmans for its expertise. In the end it would take control of Rothmans of Pall Mall in England.

In the early stages there was not much cash, but the employees were fired by the conviction: ’n Boer maak ’n plan (An Afrikaner makes a plan). A poster on the Rembrandt factory wall bore a likeness of the great artist, with his name and the slogan: ‘Every cigarette must be a masterpiece.’ Quality, not protectionism, was Rupert’s recipe for success. The caption of a drawing in the group’s offices depicting the race between the hare and the tortoise read: ‘It’s the last ten paces that count’. The message was intended to make employees aware that ‘one shouldn’t rest on one’s laurels and lie down to take a nap.’11 This was typical of Rupert himself, who never became complacent. Always impatient with the status quo, he challenged it in his constant search for new possibilities and opportunities.

Another characteristic for which Rupert became known was his capacity for hard work. His unflagging energy and powers of concentration were legendary. A twelve-hour working day was nothing unusual, his brain racing all the while − notably in the late afternoon. His work rate put pressure on his senior staff, but also inspired them to put in long hours themselves. Did this put his marriage under stress? Not at all, says Huberte. ‘Other men also get home late, but maybe via the golf club or the pub. It’s ridiculous to complain if you know your husband is hard at work.’12

The staff in the Paarl factory was small because money was tight. The little band worked day and night. The mill was far too small for what they had in mind, but construction work was not allowed to interfere with production. Walls for extensions were erected around the existing building while work continued. Then, over a weekend, the inside walls were demolished and the debris removed. The cornerstone of the Paarl building was laid by Mrs Annie Stals, widow of Dr AJ Stals, first chairman of Rembrandt, on 22 September 1951, but expansion continued and eventually all that remained of the original building of 1948 was a solitary wall and two palm trees.

One of the most serious problems Rembrandt faced at the outset was the quota system that continued to exercise a stranglehold on industrial development. After the wartime rationing of goods, the new government reimposed this system that was based on the status quo – established manufacturers benefited, but new entrants were hamstrung by the restrictions. In 1948 Rupert joined forces with other Afrikaans enterprises in establishing a new business journal, Tegniek − the second Afrikaans publication of its kind. He used it to launch an attack on the quota system.

The first issue contained an outline of his vision of the Afrikaner’s role in industry, plus an article under the heading ‘Phenomenal success of the First Afrikaans Cigarette’, which quoted a report from the Central News lauding Rembrandt’s success and its strategies for achieving it. The second issue in December 1949 went on the offensive with a scathing attack under a banner headline: ‘QUOTAS ARE KILLING US! The Afrikaner merely asks for the right to compete.’ The article, by an anonymous jurist (presumably James Yeats), argued that protracted rationing with fixed allocations based on past production militated against new enterprises, perpetuated old monopolies, created a black market in quotas and fostered other economic evils. In South Africa, it went on, this was aggravated by the fact that the vested interests that benefited from the system were owned by foreigners, whereas emerging businesses belonged to Afrikaners and their English-speaking compatriots. The state, the article averred, was protecting foreign interests at the expense of nationals by preventing the latter from developing their businesses to the full.13 The article enraged Eric H Louw, minister of economic development and mines, but the logic was irrefutable – the article emphasised that the Afrikaner ‘is not asking for protection or favouritism, merely for the right to compete’.

Rupert went further. He threatened the secretary for trade and industry that he would close the factory in Paarl if he did not get his rightful quota. He also proposed sending girls in Voortrekker dresses to demonstrate at the opening of parliament, carrying posters with the slogan, ‘Quotas are killing us!’ and to picket there for up to a year. His threats caused quite a hubbub in government circles, supposedly well disposed towards Afrikaner business, and proposals were invited. These led to the introduction of a far more flexible system and the eventual abolition of quotas. Henceforth manufacturers could submit their own assessment of their requirements, which would then be adjusted up- or downwards twice a year, depending on their output in the preceding six months. The battle was won at last, and the increased ability to compete served as a further boost to Rembrandt.

Typical of Rupert who was never one to wait for things to happen but instead made them happen, he registered Rembrandt’s trademark in 70 countries. This was something rare at the time – among Afrikaans businesses, only the KWV’s trademark had been registered outside of South Africa. Rupert’s early grasp of the importance of trademarks, something that would become almost an obsession, was to prove a crucial factor in the global success of his group.

In the early years, Rembrandt’s sales representatives did not travel in flashy cars and mostly visited dealers carrying boxes of cigarette cartons on their shoulders. Competitors tended to joke about the activities on the banks of the Berg River. While there was not much money for advertising, Rupert and his associates were inventive, initially on a shoestring budget. Company vehicles, once they could afford them, were painted green and red and acted as mobile billboards, a brand-new technique at the time. Stationary billboards were put up at strategic points. Marketing, and especially advertising, would become a major power source for the Rembrandt Group. Rupert was ahead of his contemporaries in grasping the realities of post-war capitalism. Where they still concentrated mainly on production, he put a new emphasis on marketing. He built up a substantial library on marketing and advertising, requiring his partners and colleagues to read the literature as well, and subscribed to business journals like Fortune and newspapers like The New York Times and The Wall Street Journal. His maxim was a golden rule: ‘Advertising can never be simple, sincere and repetitive enough.’

Initially Rembrandt had to compete with the giant United Tobacco (UTC) for prime advertising space in South African media, but within a very few years it had to publish advertisements warning rivals of prosecution for misusing its name. Its aggressive marketing campaigns blazed a trail in the advertising industry. In addition to the emphasis on marketing, Rembrandt’s factories were soon more mechanised and its operations more capital intensive than those of competitors, while Rupert kept an eagle eye on productivity.

In 1950 an article in Inspan, organ of the FAK and the RDB, hailed Rembrandt as the most successful post-war cigarette company in the western hemisphere. It lauded the company’s far-sighted leadership: quality control was superb, probably unique in the country; so was its scientific management, which included sophisticated costing techniques; the latest technology was imported from abroad. The article also referred to Rembrandt’s policy of providing employment for white girls in an air-conditioned workplace with comfortable rest rooms, and training white boys in the cigarette industry. The pride expressed at the success of ‘the first Afrikaans cigarette factory’, situated in Paarl, birthplace of the First Afrikaans Language Movement, was linked to nationalistic feelings among Afrikaners: ‘Each nation needs its own – things that are really important – its own language, its own land, its own factories, its own success . . .’14 An earlier article in Volkshandel, official organ of the AHI, also noted approvingly that with its employment policy, Rembrandt had succeeded in ‘bringing down labour costs to below the world average’.15

In Rembrandt’s early years there was a strong emphasis on Afrikaner culture. In 1949 the group sent 63 female employees in Voortrekker dresses, supplied to them by Rupert, to the inauguration of the Voortrekker Monument in Pretoria. A well-known Afrikaans cultural figure, Dr PJ (Piet) Meyer, a later chairman of the AB and chairman of the board of the South African Broadcasting Corporation, served as the group’s head of public relations from 1951 to 1959.

Rembrandt’s financial statement at the end of the first year showed a loss of £63 000. Rupert has described it as ‘the most critical time in my life’. Yet he did not lose his nerve. ‘In times of crisis I am always calm.’16 The following year Rembrandt registered a profit of £104 000. Rupert denied that it was all merit: 99% was sweat, the rest was plain luck − factors beyond their control. But it was a turning-point just the same. After that they never looked back.

Yet Rupert’s competitors initially underestimated him. At a gathering of tobacco manufacturers where some referred disparagingly to Rupert as a presumptuous upstart, one man − Bertie Levenstein, an executive at Rand Tobacco and Cavalla − disagreed: ‘I think this man is dynamite!’ Years later he said: ‘I didn’t get it quite right; I should rather have said this man is an atom bomb.’17 When Rembrandt eventually took over Rand Tobacco and Cavalla, Levenstein became a director.

Rupert himself regards 1950 as the year of Rembrandt’s great breakthrough. At the group’s first annual general meeting in February 1950 the chairman Dr Nic Diederichs announced that its current monthly profit stood at £10 000. By the end of that year, with a turnover of £2 million, it was able to pay its first dividend of three percent on ordinary shares. The South African economy was reviving from wartime austerity, and the industrialisation that had formed part of the war effort was having a ripple effect. It was the type of development that prompted the historian CW de Kiewiet’s much-quoted observation: ‘South Africa advanced politically by disasters and economically by windfalls.’ Rembrandt exploited the favourable climate, expanding its market share in the face of fierce competition − at one stage there were more than 80 brands of cigarettes vying for supremacy. Rembrandt won hands down. It was not just Afrikaner support any more. With Rothmans as its second leg it had a foot in both language camps.

By 1951 its market share was ten percent. More whites were smoking Rembrandt than any other cigarette in the country. A new, longer cigarette, Rembrandt van Rijn, proved particularly popular. The productivity of the female workers in Paarl was rewarded when Rupert announced in 1953 that he was raising the minimum wage for white females and young boys to £1 a day, almost double the wage other tobacco manufacturers had negotiated with a trade union a short time before. This was a prelude to the higher minimum wages for coloureds with which he would cause a stir in South African industry ten years later.

In the starting years Rupert not only sold shares with great enthusiasm, but also bought shares out of his own salary in the Rembrandt Trust, the holding company of the Rembrandt Group. Rembrandt Tabakkorporasie was listed on the Johannesburg Stock Exchange in 1956 and, like TIB and Tegkor, it became an investment of a lifetime. In 1999 Rupert pointed out that shares of R1 000 in the Rembrandt Group bought in 1948 would be worth R17 million, not counting the dividends. In 2002 it was calculated that the first shareholders who bought shares of R1 000 would have earned a spectacular sum of more than R30 million, if the value of Remgro, Venfin and Richemont is included. Rembrandt has made many people millionaires with shares that have increased 3 000 000% in value.

In a welcoming letter signed by Rupert that was sent to each new shareholder in the early years, he asked people ‘not to sell your shares lightly. Conserve them for your children.’ He heeded his own prophetic advice, and others who did likewise also reaped the benefits.

In 1953 Rupert remarked that the success Rembrandt had achieved up to that point had dispelled the illusion that Afrikaners could not compete with their English and Jewish compatriots in the business world. ‘It was essential that someone should break down the illusion.’

Despite Rembrandt’s increasing competitive edge and a rise in demand that necessitated extensions to the factory in Paarl, Rupert was aware of the fact that a price war could damage his group. He decided to extend his operations overseas in order to build up profitable new markets, and in the process also came up with innovations that left competitors behind and changed people’s smoking patterns internationally.