99Designs.com

Mar 19 2009

‘Group effort best way forward,’ says Hein

Published by at 9:51 am under Companies,Top Stories

Hein Koegelenberg, co-owner of the brand Leopard’s Leap with his wife Hanneli Rupert-Koegelenberg of La Motte, responded to my article headlined About USAPA, Leopard’s Leap and Hein (below), in which I suggested USAPA should opt for “cooperative marketing” and call in the help of colleagues in the wine industry with proven success records on foreign markets.

This is what Koegelenberg said:

With reference to your article titled “About USAPA, Leopard’s Leap and Hein”, which was published on March 18, I have the following comments. I would be grateful if you would publish them in full as a response to the article.

* Whilst we are very happy with the international successes achieved by Leopard’s Leap, I would never say our success was bigger or better than that of Distell or KWV.

* Like many other South African wine brands, we see lots of potential in the US market. We are currently working with industry groupings, formal and informal, to establish South African wine as a category in the US market. We certainly do not see ourselves as better suited, or more knowledgeable, than others in the industry to lead this effort. We believe a group effort is the best way forward.

* Whilst we source our grapes from several fine vineyards in the Cape, we do not see ourselves pursuing the “cooperatively marketed brand” model as suggested in your article. The success of Leopard’s Leap has been to produce a style and quality of wine under the guidance of myself and winemaker Eugene van Zyl.

Best regards,

Hein Koegelenberg

7 responses so far

7 Responses to “‘Group effort best way forward,’ says Hein”

  1. adminon 19 Mar 2009 at 10:52 am

    Hein reckons the success of Leopard’s Leap lies in what’s inside the bottle and that’s why he can’t go for the “cooperative marketing” model.

    This is, of course, what every winemaker thinks: that consumers buy his wine for HIS very unique grapes and HIS very unique winemaking technique. And that’s why he shouldn’t “market cooperatively”.

    From a marketing point of view, that is not (completely) true.

    I’ll try to explain with the car analogy. Back in the 1920′s (in the early days of the car industry), brand was still very, very important. It was important to buy the right brand, otherwise you broke down on every long trip you undertook. Or you found yourself suddenly sitting with the steering wheel in your hand – like my oupa did on a mountain pass between Beaufort-West and Loxton! (I think it was a Packard.)

    Nowadays (in fact, already for the past 20 years) all carmakers build such reliable cars, that you hardly consider the technical aspects any longer when you buy. You assume every brand will start every time – and they do. (I have never looked under the bonnet of my Smart Cabrio in the 7 years I’ve had it – not even on the day I bought it! I just assumed it would last – and it has.)

    A certain, basic quality has become standard in the car industry – and only manufacturers survive which can reach and maintain that level. That we all know.

    Result? We don’t buy cars on “what’s inside” any more. We take that minimum standard for granted and buy on “superficial” factors, such as “what it looks like”, “its prestige value in the neighborhood” etc.

    The car industry has matured. And, so has the Cape wine industry. At every price point, the buyer knows “what’s inside”. He assumes this basic, minimum standard, or quality, will be inside and let his buying decision be influenced by other factors, such as what the packaging looks like, the image of the wine and whether the owner was (or is) a famous golfer.

    In short: “What’s inside” is ever less important in the buying decision of the average wine consumer today (Note: that 10% of the market which is very knowledgeable on wine, and has lots of money, is excluded here). Making it ever less important whether the Leopard’s Leap was made by Koos Doos or Piet Pompies – and the marketer of Leopard’s Leap ever more important.

    If the price is in the range I want to spend today, and the label sexy, and the name reminds of a famous golf player – then that’s good enough to me. “I’ll take two, thanks.”

    Christo

  2. Heinon 21 Mar 2009 at 8:38 am

    Christo,

    I fully agree with your point that quality at a price point is a given. We all know that we have the most knowledgeable consumers out there. They know exactly the value at each price point.

    I differ with you on the argument of cooperative marketing. Australia did this, and became known for big, discounted, pay for listings, small margins, all brands are big volume. We in SA must make sure that we keep the fingerprint perception with the consumer.

    Yes, we must have consistency and bigger volumes, but we must not lose our “personalised perception”. Fortunately, we do not have these big, successful companies.

    Issues I’d really like to debate with you, are how we can ensure distribution in this new economic climate; will Parker and Wine Spectator still be the trendsetters on perceived wine value? What about the distribution chain, that surely must get shorter to the consumer? Shelf space will be determined by a whole new set of rules?

    I would like to hear your comments on these questions.

    Hein Koegelenberg

  3. adminon 21 Mar 2009 at 12:28 pm

    Hallo Hein,

    Thanks for your reply. I’ll add my thoughts to your questions later today, or tomorrow.

    Now I must quickly go into town to find a few bottles of SA wine for the German guests tonight. (No, seriously.)

    I already know it’ll be a frustrating shopping trip, because (a) the choice is very limited (seldom more to choose from than Golden Kaan and Nederburg!) and (b) when one is lucky to see anything else, the prices are exorbitant.

    Last weekend I went to the most upmarket wine shop in Stuttgart (thanks to Porsche, Daimler, Bosch and other big companies, one of the most affluent communities in Germany) and wrote down a few prices:

    Allesverloren Shiraz 2007 = €17.90
    Graham Beck Pinotage 2007 = €19.95
    Neil Ellis Sauvignon Blanc 2006 = €14.50
    Mont du Toit 2003 (or maybe 2006, can’t read my note now; but it was a blend and I couldn’t make out what, because the salesman complained about my note-taking; anyway, the price was the most interesting aspect of this wine, and I managed to jot that down) = €32.60

    At R13 to the Euro, that comes to R432.80 per bottle. (Ja, I see now my Platter 2007 gave this 2003 four stars. Maybe, just maybe, R432.80 is not too much?)

    There were also two Delheims going for reasonable prices (Cabernet Sauvignon/Shiraz 2007 for €9.95 and a Pinot Rose 2008 for €5.75.)

    But, that was my choice.

    Regarding the “personalised perception” that the market has of SA wine.

    Germany is one of the biggest foreign markets for SA wine (if not the biggest in the world). Because of the fact that wine buyers here never see more than three or four SA brands next to each other on a German wine store shelf, the Germans do not have this “personalised perception” of SA wine. (I exclude the 10% who have been to SA and the winelands.)

    My point: The biggest market doesn’t know the SA wine industry consists of a huge number of small producers, making it “personal”.

    Put in another way: This WOSA line that “variety is in our nature” flies miles over the heads of 90% of German wine drinkers…they don’t experience it anywhere and don’t understand it.

    I guess in the US the situation is even worse. There SA wines even haven’t got a separate category (are not displayed separately on the shelves under a banner “SA wines”).

    To establish this message (variety, personal, many small producers) in the big foreign markets will cost a huge amount of money. And even then, it’ll only come over as credible, when local wine buyers can actually SEE the variety on the shelves of their local wine shops.

    To summarise: I doubt any market outside South Africa REALLY has this “personalised perception” of the SA wine industry. And to properly establish that perception in the US and/or Germany alone, more than advertising will be needed…there will also have to be wine shops displaying the variety.

    That’s why I say: Let’s forget about this “subtle” and “indirect” marketing and shoot directly. Meaning, let’s put our energies and money into an effort to get more high volume, value-for-money brands (such as Leopard’s Leap) on the shelves and into the trolleys of the consumers.

    I agree with you that we mustn’t overdo it (the way the Aussies did it). But, I think the Cape wine industry must search for the golden middle between “many, small, personal” and “big volume, value-for-money”. And that would leave room for a few more “Leopard Leap’s”, if you understand what I mean.

    But, more later…I must be off to the wine shop (with its 1,000s of different wines…and three bottles of SA wine tucked in the corner.)

    Christo

  4. adminon 21 Mar 2009 at 5:04 pm

    I’m back from my shopping trip and it was not half as bad as I had expected. On second thought, I also want to qualify my above statement regarding “personalised perception”. Until later.

    Christo

  5. adminon 24 Mar 2009 at 10:31 am

    Hein posed a few questions in his earlier comment (above). More specifically, he asked:

    * How can SA wine makers ensure distribution in the current economic climate;
    * Will Parker and Wine Spectator continue to set the trends for perceived wine value?
    * What about the distribution chain? Surely, it must get shorter to the consumer?
    * Shelf space seems to be determined by a set of completely new rules.

    I’d like to offer a few ideas, but before I do, let me just “qualify” (or “soften”) my point (in the comment above) that the “personalised perception” doesn’t exist in Germany.

    That view of mine, is too simple. The truth is a bit more complicated. In fact, about 10% to 15% of the 83 million Germans buy wine in the price range SA wines appear on shelves in Germany, ie. €6.95 per bottle and higher. (Nederburg and Golden Kaan and a few Robertson wines sell for less, but the bulk of SA wines are on offer for €6.95 or more.)

    This 10% to 15% is a given…a fixed number to do with household spending power etc, and which can’t be changed by SA wine marketers. So, this is the “potential market” for SA wines in Germany.

    Now, it is also true that about 10% to 15% (my guess) of Germans have travelled to SA and have been to the Cape winelands. And there might well be a big overlap between those who’ve been to SA and the “potential market for SA wines” in Germany.

    I’d guess that up to 80% of the “potential market” has been in SA, meaning the “personalised perception” could be better anchored in Germany’s “potential market” than I’ve indicated above.

    So, while I still think the “personalised perception” has more value on the supply side (eg. by pushing producers to up their quality), than on the demand side (you won’t really get a consumer to take a SA wine from the shelf by saying: “Our industry has many small producers, making it personal”. The consumer doesn’t give a damn. He’ll probably ask: So what? It’s all too indirect and esoteric to most), it definitely should be nurtured.

    So, now to those questions…in the comment below.

    Christo

  6. adminon 25 Mar 2009 at 1:16 pm

    The questions again…

    * How can SA winemakers ensure distribution in the current economic climate;
    * Will Parker and Wine Spectator continue to set the trends for perceived wine value?
    * What about the distribution chain? Surely, it must get shorter to the consumer?
    * Shelf space seems to be determined by a set of completely new rules.

    My response:

    As Bob Dylan promised back then, “the times they have a-changed” and they will continue to do so – also for wine marketers.

    The old ways won’t vanish (the winemaker appoints a country agent to take the wine off his hands and ensure they are distributed to retail and consumers in the agent’s country, freeing the winemaker from the costly and time-consuming task of marketing his own wines), but new ways will most certainly muscle their way into the mix and grow ever more prominent.

    The Cape wine industry should rejoice that this is so. And it should embrace the new ways as soon as possible. And with all it can throw at it (in the form of budget).

    Because these new ways have it in them to make the industry master over its own destiny (or at least give it far more control over its own destiny than it had until now.)

    More specifically, they can help with global distribution, neutralise the power the Parkers and Wine Spectators of this world have over what sells and what not, shorten the chain to the consumer and make “shelve space politics” irrelevant (or less relevant).

    By now you must know what the “new ways” are: The internet and the marketing, distribution and sales tools it has spawned in the last three years.

    The power of the internet may still be underestimated in SA. In fact, I know it is: SA is one of the least “internet-involved” communities in the world, with only about 5 million of the 48 million people having access to it. Compare that with almost 100% of the 83 million Germans!

    So, the danger exist that the WOSA’s and USAPA’s of this world may underestimate (or simply misunderstand) the importance, value and power of this marketing channel in the world outside Africa.

    To list all the ways the internet can help the Cape wine industry build its global market share, would take a few hours. I’ll gladly do it at a later stage. For now, I’d simply like to say: It can be much cheaper than you think!

    Because, as an industry, you don’t have to re-invent the wheel (don’t build new things). Rather, partner with people and sites already operating successfully on the web. On condition they spend the money – not the industry.

    Just one example of a typical “new way partnership”: Wine blogs have mushroomed all over the world. (Click here for a list of wine blogs in Germany.) What could be easier and cheaper than for WOSA/USAPA to compile an e-mail mailing list of wine blog editors in the main wine consuming countries of the world, and feed them with interesting news items on Cape wines?

    Wine blogs are irrelevant? Wrong. In Europe the wine bloggers have organised themselves in an association, which organises conferences and the whole tooti.

    On the list of German blogs (above) you’ll find a blog called Weinverkostungen.de. (Roughly translated as “wine tastings”….) It’s just one like all others. But, it receives 600 visitors per day (mostly German) and registers 600,000 page views per month! It’ll gladly publish all wine write-ups with photos Cape winemakers send it – for free.

    There are many more tools Cape winemakers can use to market their wines directly to consumers – for nothing more than their time.

    Obama understood the power of the internet. Yes, I know you don’t want his job. But, WOSA/USAPA should take on the role of “doing the internet marketing thing on behalf of the wine farmer”. ‘No money in the budget’ is not an excuse any longer.

    The new ways of marketing wine will require the wine producer to be a bit more involved in the marketing process. But, it’ll be a small price to pay for far more control over their own destinies.

    I’ve answered all the questions above – although not in the way you were expecting me to. I’ll gladly list more examples of “new ways in the new world” to anyone interested.

    (Eg. a site which publishes short videos produced by Cape winemakers in YouTube style – for download by online wine sellers, online wine retailers and wine information sites at no cost. And so spread the message of Cape wine to the millions of visitors to these sites. Again at no cost.)

    Christo

  7. Heinon 27 Mar 2009 at 10:59 pm

    Dear Christo,

    Thanks for your positive outlook on the challenges that are facing the brand owners of South Africa.
    The above is also one of the things that Leopards Leap identified as crucial if we want to be successful.

    Hein

Trackback URI | Comments RSS

Leave a Reply