Superiority with scale

by | Aug 1, 2016 | Business and Marketing

Johann Krige

Big brands that boast quality are known to boost entire regions. South Africa has been less successful at producing quality brands with sizable scale and top marketers agree that this is a real shortcoming.

Often called the aircraft carriers of the international wine trade, global brands tend to pull their niche counterparts in their slipstream – particularly if quality and not price is the driving appeal. While there has been an explosion in exciting niche creations in South Africa, the impactful, bigger volumes are few and far between.

This is however bound to change with several key players laying the foundations for South Africa’s global brands of the future.

NO QUICK FIXES

Kanonkop is a hive of activity as proprietor Johann Krige guides me through the impressive expansion and renewal at the cellar. “The last time we invested in expansion was in 2008, when most people were terrified by the recession. Sometimes you just need to bite the bullet and do it. And this time we’re doing it properly!”

Marc Kent

Key investments include a large barrel cellar, onsite wine storage, new bottling facilities and more open concrete fermenters – signalling Kanonkop will retain its trusted and proven traditional methods, only on a larger scale.

Kanonkop Kadette has enjoyed remarkable growth over the past five years. At one stage some of the wine had to be made at other facilities, but Johann was adamant all production has to happen under one roof at Kanonkop. “It made me very nervous! I’m going to sleep much better knowing that every bottle of Kanonkop is made and bottled at the estate. That’s the way it should be for a quality brand.”

He emphasises that when it comes to building a respected quality brand there are no quick fixes. “We never buy in wine for Kadette. Never. Those quick fixes come back to bite you,” he stresses. Quality should always be the most important consideration and deviating from this original focus is one of the reasons South Africa doesn’t have the impressive volume brands it should have.

Etienne Heyns

“Chateau Libertas used to be a magnificent wine,” Johann says. “Quick fixes and a shift towards a more commercial style ruined what could have been a pillar in the South African wine industry.”

It was important to first establish the pinnacle, such as the acclaimed Paul Sauer, before expanding the biggervolume brands. The Kanonkop brand plays a significant role in the status of the larger-volume Kadette and there should be a clearly identifiable golden thread connecting the various products. In Kanonkop’s case the main focus is Cabernet Sauvignon and Pinotage from Stellenbosch.

“I have confidence in Stellenbosch,” Johann says. “For the foreseeable future every bottle of Kanonkop will be Wine of Origin Stellenbosch. That is part of Kanonkop’s branding and I’m confident there’ll be a substantial surge in demand for Stellenbosch Cabernet Sauvignon and Pinotage.”

While there has been a worrying decline in new plantings of particularly Stellenbosch Cabernet Sauvignon, Johann maintains that at the right price there are enough quality grapes. “That’s why we have long-term contracts with important grape producers – a reliable supply of quality grapes is crucial.”

When asked if the introduction of Kadette Pinotage shifts the emphasis from the original and trusted blend, Johann grins and says, “No, I don’t think that’s a concern. I really like Pinotage and I think from a South African perspective it’s not negotiable to have a proper, large volume Pinotage brand. Pinotage is flying in Asia, which is fast becoming one of Kanonkop’s most important markets.”

He says that in order to build sustainable, long-term brands, it’s crucial to have a short-, medium- and long-term plan. “These things don’t happen overnight. In fact I’m not sure that I’ll necessarily fully benefit from the current investments. But I do know that Kadette will soon be a million-bottle export brand and that’s what matters.”

BRING ON MORE CLASSIQUES, RUBICONS AND KADETTES!

Referencing Rupert and Rothchild’s Classique, Meerlust Rubicon and Kanonkop Kadette as leading examples, Boekenhoutskloof winemaker Marc Kent says it’s imperative that South Africa has more big global brands.

“Sadly South African producers are slow and loathe to celebrate our champions,” he says. “I’ve been so disappointed to hear fellow producers bad-mouthing other South African brands to clients and customers instead of celebrating their successes as being good for the overall category.”

The Chocolate Block is one of these success stories and has grown from eight barrels to becoming one of South Africa’s best-known premium brands. Marc emphasises quality always trumps volume with all their brands at the premium end. “The team of winemakers blend The Chocolate Block without any volume or costing considerations. Once we have the desired product, the volume is ascertained and the wine is presented to the market.”

He says too many wineries look at the input costs and then blend a wine to try to achieve a margin without any concern for the intrinsics. “The Chocolate Block has from time to time dropped in volume from one vintage to the next. We’ve decided to retain, almost as a manifestation of our confidence in the wine, an indication of the number of barrels on the label, regardless of the volume. Our barrel-to-bottle return is still surprisingly low for this brand. The major positive is that the hundreds of barrels not selected inevitably land up in The Wolftrap.”

Many South African premium reds reach a ceiling as they lack the distribution – which is a strength of the Vinimark group which comprises Boekenhoutskloof. Often producers lose the appetite for growth when faced with the huge costs of growing inventory for premium reds. Marc says wineries should also be cautious of aspirational pricing and trying to price a wine too high in order to position it at the premium end.

From the release of the 2015 vintage, Boekenhoutskloof will for the first time be labelled Wine of Origin Swartland. This emphasises the importance of focus and specialisation, even for big brands. The change will further enhance the reputation and pedigree of the brand, Marc says.

GLOBAL BUBBLES

The recent announcement that Graham Beck – a brand synonymous with Méthode Cap Classique – will only produce bubbly going forward, is a prime example of a producer specialising in what the market has confirmed it’s good at. Graham Beck has been producing Méthode Cap Classique for 26 vintages and it’s no wonder that winemaker Pieter Ferreira is better known as Bubbles.

Graham Beck sales executive Etienne Heyns says MCC has the same key challenge as all South African wines: convincing the world that South Africa offers unquestionable quality and value, also at the higher end. For MCC this means competing with the likes of Champagne, Cava and Prosecco. He adds global brands are essential for paving the way in the international market for the more than 310 Cap Classique products.

Focus remains pivotal – not only in terms of category, but also key markets. For more than a decade Graham Beck’s key export focus has been the USA, where its bubbly is sold in more than 40 states. “The reason for focusing on the US is the remarkable advantage of being the first entrant into the market,” Etienne says. “It however requires significant investment to gain access to new markets, particularly for by-the-glass listings.”

He regards long-term sustainable investment in distribution and an unwavering emphasis on quality as the most important considerations for building a global brand. A constant presence in the market is also imperative. After the USA, the UK and Japan are Graham Beck’s most important export markets. Etienne says the success in all three these markets is attributable to a long-term relationship with reliable distributors. All three markets can also absorb substantial volumes at premium price points.

To maintain sufficient volume without compromising quality, the next decade will see significant investment in production facilities to allow adequate lees contact in significant volumes. “A long-term vision always supersedes short-term successes,” Etienne says.

Article Archives

Author

Search for more articles

Generic selectors
Exact matches only
Search in title
Search in content

Stay current with our monthly editions

Shopping cart
There are no products in the cart!
Continue shopping
0