How do you turn a business from an almost unknown bulk wine supplier to a forerunner in packaged wine with three strong brands in little over a decade? You know your consumers, know what they would want tomorrow and work hard with good partners. But above all, you have to be innovative.
If you think of Overhex, you immediately think back to the old production facility along the R60 outside Worcester. Today you can easily stop here at their colourful bistro and tasting room for a juicy hamburger and any of the wines from their Balance, Mensa or Survivor ranges. These are also the same three brands that have won regular awards locally and internationally over the past few years.
The Overhex Group was founded in 2005 and up until three years ago, the company sold 85% of its wine in bulk, compared to 15% in packaged format. This business model now looks quite different, with 75% of production being sold as packaged, and only a quarter in bulk.
“The move from bulk to packaged is driven by our philosophy of adding value,” says Gerhard van der Wath, co-owner of Overhex Private Cellar and owner of Overhex Wines International, the sales and marketing leg of the Overhex Group. “Our wine grape producers work hard and selling their product in a 24 000-litre container for someone else to get the credit is neither strategic nor competitive.”
Overhex’s market-driven approach, strong consumer focus and consistent quality are the driving forces behind the establishment and growth of their packaged branded wines.
Strong export growth
Overhex has shown steady growth in the relatively short period since its establishment, and is now one of the 10 largest exporters of South African wine. Close to 95% of Overhex’s total production is exported to 32 countries, of which China, Japan and the UK are their three largest export destinations.
“We were fortunate enough to obtain the right partners overseas who understand both South African wines and the consumers in the countries we export to,” says Gerhard. Reading and traveling is at the top of the Overhex team’s priority list. “You must stay on top of things,” he says. “Read about future trends, look at what other industries are doing and think about how you can apply it in your business. Follow your instincts, but get to know your consumer firsthand and keep in touch with your importers personally by traveling to your export destinations yourself. ”
Overhex is experiencing success in the Eastern market, but in the established European market, the upward shift in price points remains a challenge. “These consumers are not accustomed to inflation, so it’s hard to persuade them to pay more,” says Chantelle Potgieter, CEO of Overhex Wines International.
Another priority that Overhex is to be at the forefront of technology and innovation. Gerhard believes that the traditional wine bottle will stand the test of time in consumers’ eyes. “You don’t need strange packaging to keep the consumer’s attention and loyalty in the long term,” he says. “Rather be innovative with what you offer in the bottle and how you convey that offering to consumers through a smart marketing strategy and striking label.”
This approach is evident from the innovative campaigns that Overhex follows with each of its brands in its diverse portfolio. The Survivor ultra-premium range, with the distinctive Nguni cow on the label, is made primarily from grapes in the Swartland region and pays homage to a famed cow that jumped off a moving truck and settled on one of the farms nearby.
“The recently released Survivor Wild Yeast Syrah and Chardonnay have different origins, but the story now goes Survivor has looked for greener pastures,” said Gerhard with a smile. Wine critic and writer Michael Fridjhon has also been involved in the Survivor brand from the get-go to ensure consistent quality.
The Mensa series, launched last year, is the first local wine brand to be labelled ‘alive’ through an augmented reality app that tells the story of the wine and its mysterious female character in book format. Mensa is sold in the premium to super premium price segment, targeting mainly women.
Balance, the oldest member of the Overhex family’s slogan ‘For life’s lighter moments’ and playful elephant on the label reflects the uncomplicated nature of this entry-level wine series. The Overhex team are excited to announce Balance’s new retro look and interactive smart phone and computer game at the ProWein trade show in Germany during March. “We want to give the new generation wine drinker an informal and entertaining platform to interact with the brand,” says Chantelle.
Apart from a number of other achievements through these three brands, Balance was named one of the 100 most recognisable wine brands in China in 2014 – and it was the only South African wine on the list.
Find the right partners
Overhex buys grapes for the Mensa and Balance range from producers across the Western Cape. “This differentiation gives us access to a kaleidoscope of flavours and gives us more freedom than traditional wine portfolios,” says Chantelle.
The company regards every wine grape producer that delivers to them as an important partner. “If you’re only into making money for yourself, you won’t survive in the long run,” says Gert van Wyk, CEO of Overhex Private Cellar. “Find the right partners throughout the value chain and make them part of your strategy so that everyone can be sustainable.”
Another partner, Darling Cellar, takes in the grapes for the Survivor wines to ensure that it is processed at optimal temperatures and sugar levels, along with the Overhex winemaking team. Overhex has also forged strategic partnerships with international role-players in the past decade, increasingly bottling wine locally for specific clients instead of exporting it in bulk. “This strengthened our business model even further, because we could increase turnover and job creation in the local value chain through these partnerships,” says Chantelle.
Improve the image of SA wines
If you think of the most well-known wine producers in the world, Penfolds in Australia and Concha y Toro in Chile come to mind. “It’s a pity that not one South African company has managed to establish a strong, distinct brand with economy of scale and high price-points for the country,” says Gerhard. “This would have changed the perspective of South African wines throughout the spectrum.”
According to him the industry should invest in a good PR strategy in collaboration with influencers in the respective export countries.
Wine prices rose in 2018, but producers and cellars should not get into a comfort zone. “As an industry we should demand higher wine prices to remain sustainable, but has anyone asked consumers whether they would be willing to pay more for our wines?” Gerhard asks. “The story that we should tell our consumers is not one of ‘We are under financial pressure, pay more for our wines’, but rather ‘Our wines are so fantastic, you will be more than willing to pay more for a better wine experience’.”
The road ahead
Although Overhex focused mainly on exports in the past, they are planning to expand their footprint locally. “It’s more expensive to sell wine in South Africa compared to other countries, especially with regard to marketing and logistics,” says Chantelle. “So we’re doing our homework properly.”
Gerhard believes that cellars should be cautious of having a short-term approach. “It takes five to seven years to get an inning, so be patient, but be ready to grab opportunities that come along,” he says. “Sometimes you are blessed with good fortune and you’re in the right place at the right time – but you should be prepared, able to identify opportunities and have a team that can make it work.”