The Cape wine business gets some bad financial press

There have been a number of blog articles following from a frontpage story by Stafford Thomas in the South African Financial Mail. Neil Pendock was one of the few who made positive comments re the article in his blog. He expanded on his thoughts on wine.co.za today.

The article has been on my mind for a few days and following today’s article felt compelled to put down some thoughts based on our own experience at Vrede en Lust. I bought the estate nearly 15 years ago and can relate to a lot of the comments. Been there, done that, got the T-shirt…

I think the point that many new entrants miss is quite simple: Ask most why they enter the wine business and they will tell you it is because of a ‘passion for wine’ or something like that.

The problem is that there is no shortage of wine and esp. very good wines out there. There is however a shortage of passion and the authentic stories that builds smaller brands.

There are many wine factories out there, corporate affairs focused and with economies of scale. They have the distribution, buying power and marketing budgets to flatten all. Think Distell and Two Oceans.

The only way a smaller winery, no matter how beautiful or impressive, can compete, is by being a family winery in the true sense of the word. That means you need to be involved deeply as a family, close to the customers, close to the business and with a great deal of passion. Obviously one needs to make very good wines too, but as we all know there is a lot out there!

With all respect to GT, whom I admire greatly, telling everyone that he would not do it again does not reflect an ounce of the right kind of passion. In fact the complete opposite!

Buyer of wine from smaller wineries pay more for the wine and do so mainly because what they buy is the result of personal involvement, the capacity to retell the stories learned, which differentiates the wine from the impersonal corporate product it so often is.

I am not speculating re this, from personal experience I can tell you that our wine business improved dramatically once we stepped in and really put our time and our backs into it! I took over sales and marketing 2 years ago and my wife Anneke took over all direct sales and the tasting room. Growth since then has been dramatic.

We could not do this without the excellent contribution by Susan and her wines, with the support of my brother Etienne and his teams in the vineyards. But I am sure they were also much more motivated with us fully involved and committed to the business.

One has to understand that it means weekends and holidays are prime time at the cellar door, and that it does not really help to get a PR company to write your blog, tweet for you etc. The customer experience needs to be real!

If you are not prepared to do this fully involved, then best to buy a spot with a nice view and rather spend the millions on fitting out a beautiful cellar and stock it up with the best out there…..

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5 Responses to The Cape wine business gets some bad financial press

  1. Johan says:

    Very, very well said!

    You guys (and girls) are doing a fantastic job out there at Vrede & Lust. Keep up the good work!

  2. What’s not to love about the small independent winery?

    Stafford Thomas should take a global perspective on wineries. Size, volume, distribution, massive marketing budgets may result in signifcant sell through and impressive gross reveunes but this doesn’t always translate into net profits. Sustainability in the current economic climate has many bloated operations breathing heavy.

    Being large has proven to be a negative attribute across industry verticals of late around the world.

    Verde en Lust’s size and business model are perfect for the times; needing only to sustain the passion to produce excellent wines. What could be more perfect?

  3. Hein says:

    Dana.
    I fully agree with your comments.We need committed and passionate wine family businesses .If you as the owner does not exactly know where you want to take your brand with: quality,style,perception,and distribution plus do not live the philosophy,how can you expect other people to associate with it.

    Hein Koegelenberg

  4. dionysus says:

    Hi Dana

    I think it is appropriate that I comment regarding my experience at Vrede en Lust this past weekend, here. Your comments regarding the financial viability of being involved in the wine industry, what it takes to succeed and what formula you follow is borne out through our experience over the weekend. All business is about people, and people buy from people they like. Simple. What HK says above resonates with me…live the philosophy. Your philosophy of great wine, passion, great story and above all else people is what we witnessed on Sunday. There are loads of good wines, equally there are loads of not so good wines. Your wines are good, will appeal to a broad audience, your also not a “one trick pony” winery i.e: the mocha malbec and the sweetish viognier are good differentiators. Almost each wine had a story, a good story. Who cares about clone, soil types, french vs american oak? Winemakers and wine anoraks. The final piece of the puzzle, people and passion. We were so warmly welcomed by Lisa, her smile and personality shone through, her passion for the brand was infectious. But we noted there was 2 other people working in the tasting room and they too displayed the same enthusiasm and passion. Big, commercial farms can be so impersonal, lack heart, lack soul, not Vrede en Lust. I feel like saying “feel it it is here” because we felt the wine passion.

    Latest Vrede and Lust Fan
    Dionysus

  5. Dana Buys says:

    Thanks for the kind words Dionysus, Hein, Tom (well overdue for a visit down south!) and Johan! We are blessed with a great team and it is really an honour to work with them.

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