The High Court of Kenya has dismissed an application by Wow Beverages, a Kenyan beverage marketing company, to block Namaqua Wines, a South African wine maker, from terminating their five-year distributorship deal. The court found that the alleged exclusive distributorship was never formalized in a written contract. This ruling has significant implications for the business relationship between the two companies.
Wow Beverages had sued Namaqua Wines in October 2025 after the South African company gave notice that their relationship would end on November 1, 2025, citing concerns over product range, stock, and payment. Wow Beverages claimed that the relationship, which began in 2020, was an exclusive distributorship agreement, despite the absence of a formal written contract. The company asserted that it had invested over Sh150 million in staff, distribution infrastructure, marketing, and warehousing, and valued its goodwill at over Sh300 million.
Namaqua Wines disputed Wow Beverages' claims, stating that each shipment was governed by separate purchase orders that could be accepted or rejected. Morné Koen, Namaqua's sales manager for Africa and the Middle East, explained that consignments were supplied on 90-day credit terms, regardless of whether Wow Beverages had sold the wine or collected payment from customers. Namaqua Wines also denied representing that Wow Beverages should make the investments claimed in the suit and argued that the relationship was not an exclusive distributorship.
The court's decision was based on the evidence presented, which showed a trading relationship lasting about five years. However, the documents pointed in different directions on exclusivity. The judge noted that Wow Beverages' last reported arrears of ZAR225,360 (Sh1.7 million) had been paid on October 8, 2025, before Namaqua Wines issued its termination letter. This payment was a significant factor in the court's ruling.
The court rejected Wow Beverages' contempt application, which arose after the company complained that Namaqua Wines had failed to fulfil purchase orders submitted on July 28, 2025, despite interim orders. The judge found that Namaqua Wines knew about the orders but said the order requiring compliance with the distributorship terms did not clearly require every purchase order to be fulfilled.
The court's ruling also highlighted the risks of unwritten distribution deals. The judge stated that Wow Beverages was the author of its own misfortune, having presented an ambiguously worded prayer to the court. The court declined to compel Namaqua Wines Distribution (PTY) Ltd to continue supplying wine to Wow Beverages pending determination of the main suit.
The dispute between Wow Beverages and Namaqua Wines has significant implications for businesses operating in Kenya. The court's ruling emphasizes the importance of formal written contracts in business relationships. Wow Beverages' General Manager, Anthony Kairu, had insisted that the company had a legitimate expectation that the distributorship relationship would last well over 10 years to justify its heavy investment.
Key points
- The High Court of Kenya has rejected Wow Beverages' application to block Namaqua Wines from terminating their distributorship deal.
- The court found that the alleged exclusive distributorship was never formalized in a written contract.
- The ruling highlights the risks of unwritten distribution deals and emphasizes the importance of formal written contracts in business relationships.
