Consumer buying trends are changing rapidly, making a rethink of business models unavoidable.
In 2020, when the pandemic resulted in a total lockdown, including restrictions on the sale of alcohol and disrupted supply chains, Cloof Wine Estate took the bull by the horns and changed its business model.
“The South African wine industry has had to adapt to interesting changes since its start in 1659, but the latest global pandemic has given all of us one of our biggest challenges to date,” CEO Martin Beffit says.
“We’ve had to deal with a difficult two years, but with a history spanning more than 360 years this industry has become resilient and Cloof Wine Estate is no exception when it comes to adopting a positive approach to what we face going forward.”
During this time the cellar re-evaluated its business model and made proactive changes, firstly by increasing staff training and strengthening the team spirit. It also introduced product improvements such as better, more cost-effective, innovative packaging, such as the Darling canned wine and Bag-in-Box ranges that meet the demands of emerging markets.
Service levels were improved by redefining routes to market to ensure more efficient deliveries.
With uncertainty and fear running high, the company extended its support levels for staff members to ensure they were fully aware of their medical rights. “We also provided flexible working practices such as working from home options with regular Zoom meetings,” Martin says. This meant staff members had more control over their personal lives while remaining fully accountable and mindful of their importance in the company.
“The pandemic provided the perfect time to rethink everything,” Martin says. “We carefully looked at each area of the business, including our current routes to market, trade channel, value proposition, customer relations and communication, company resources and procedures, and supplier terms and costings. We reviewed each area and improved procedures and controls for economies of scale. We also rationalised the ranges that were not performing and introduced product services in line with the acceleration of consumer demand.”
By rationalising the range, the estate was able to focus more on less, and enhance the look and feel of those products that were the heroes in its portfolio. It also meant they could negotiate better terms with suppliers which ultimately added value.
The change in Cloof Wines’ business model led to the introduction of new packaging that’s a better fit with national and international transportation, and more innovative point-of-sale items that customers can aspire to. “Packaging in this industry is an expensive part of the finished goods, but is also an important part of customers’ first impressions,” Martin says.
“So while costs have to be monitored it’s also important to ensure that packaging is an essential part of the overall look and feel. Consumer buying trends are changing rapidly and millennials are driving this shift. The demand for more inexpensive, portable, environmentally friendly packaging for wine is accelerating, and with a lower carbon footprint and higher recycling rate than glass, cans and boxes fit in with Cloof Wines’ sustainable wine production practices. It also explains why we’re a WWF Conservation Champion.”
The pandemic also changed Cloof’s approach to ecommerce. “Covid has accelerated consumer buying trends for all industries,” Martin says. “Consumers now expect a simple and easy online buying experience. Engaging social media activity, speed of delivery and products that can be transported easily and efficiently are all part of the online experience that sets businesses apart and develops customer loyalty.”
One of the biggest lessons learned from the pandemic was that supply chains were not set up for the global pandemic, Martin says. “We found we had to be more flexible in getting our products to market, so we adapted to market changes through a more streamlined approach and by extending our product services to a wider customer base.
“How is Cloof different today? The challenges have meant that Cloof Wine Estate has developed a closer bond with its entire workforce by understanding their needs. We also have a better understanding of new emerging markets and greater engagement with our global customers though all forms of media, including social media. Challenges can only make us more innovative. We’re positive these challenges will take us to the next level.”