No vin for the bar­gain bin

How to sell your en­tire wine pro­duc­tion in two hours – at a profit

Finweek English Edition - - Openers -

SOUTH AFRICA’S wine mar­ket is no easy space th­ese days, with a plethora of new bou­tique of­fer­ings com­pet­ing with more es­tab­lished brands at a time when dis­cre­tionary spending is be­ing squeezed. Even ma­jor pro­duc­ers such as Dis­tell and KWV are find­ing the com­pet­i­tive wine mar­ket a hard slog. For new and smaller pro­duc­ers it’s of­ten dif­fi­cult to off­load wine pro­duc­tion prof­itably – which, of course, may ex­plain the ar­ray of “af­ford­able” wines cur­rently on the mar­ket.

How­ever, well known wine­maker Fran­cois “Wing Nut” Naudé – un­til 2005 the wine­maker and CEO of L’Avenir Es­tate – has seem­ingly stum­bled on a novel way of prof­itably mar­ket­ing an en­tire pro­duc­tion load. Naudé – helped by his fam­ily – set out to make a pre­mium range pino­tage blend, draw­ing in wines from top Cape es­tates such as Harten­berg and Del­heim.

In­stead of tak­ing the blend – branded as “Le Vin Fran­cois 07” – to se­lec­tive re­tail­ers and wine bou­tiques, the Naudé fam­ily de­cided to hold an auc­tion to sell off prac­ti­cally all its stock (bar­ring a few cases that will be auc­tioned for char­ity). In essence, they stripped out some ex­or­bi­tant dis­tri­bu­tion and mar­ket­ing costs, re­plac­ing those with a one-off event cost as­so­ci­ated with host­ing a black tie func­tion for the well heeled and well con­nected in SA’s wine cir­cles.

The auc­tion con­cept might be per­ceived as a risky sales plot. Po­ten­tial buy­ers on the night sim­ply may not be in the mood to spend, es­pe­cially since the Naudés’ event was crammed be­tween the two big Cape wine auc­tions hosted by Neder­burg and the Cape Wine­mak­ers’ Guild.

For­tu­nately, the auc­tion – held in a fash­ion­ably run­down ware­house in Ob­ser­va­tory – worked a treat, with the en­tire con­sign­ment of 135 cases sold in around two hours. On av­er­age, Le Vin Fran­cois 07 fetched around R250/bot­tle – which ranks the new blend along­side es­tab­lished ranges from pre­mium pro­duc­ers such as Meer­lust, Tokara and Kanonkop.

One of the no­table buy­ers was well-known restau­ra­teur Alan Pick ( The Butcher Shop & Grill), who snapped up 60 cases. That at least means the gen­eral pub­lic – no doubt at a touch more than R250 – will be able to sam­ple Le Vin Fran­cois 07.

Nat­u­rally, swift sales were driven by buy­ers ap­pre­ci­at­ing the rar­ity fac­tor, re­al­is­ing only around 1 600 bot­tles of Le Vin Fran­cois 07 will be in cir­cu­la­tion.

Fran­cois Naudé ju­nior, who han­dled the mar­ket­ing of Le Vin Fran­cois 07, says with all the wine sold, the fam­ily showed a profit. “As we have very lit­tle over­heads the net profit mar­gin was quite good. And for us that was the launch is­sue and we re­ally just didn’t want to ‘payin’.” He es­ti­mates the mar­ket­ing costs for Le Vin Fran­cois 07 were pegged at around 40% of turnover. “It was very im­por­tant to put money be­hind our brand.”

By Fin­week’s cal­cu­la­tions the maiden run of Le Vin Fran­cois gen­er­ated sales of around R500 000 (in­clud­ing mag­nums and other “big” bot­tles). That’s not bad for one night’s sell­ing. But the chal­lenge for the Naudé fam­ily will be to repli­cate the “sold out” achieve­ment by in­creas­ing pro­duc­tion without com­pro­mis­ing the wine’s “rar­ity fac­tor”.

Cur­rently, a pro­duc­tion push looks un­likely, with Naudé point­ing out that with this par­tic­u­lar wine the fam­ily will def­i­nitely not be in­creas­ing pro­duc­tion. “The rar­ity fac­tor is crit­i­cal to the sus­tain­able suc­cess of the ven­ture.”

How­ever, Naudé says the con­cept has legs. “I think we suc­cess­fully il­lus­trated we’re se­ri­ous about this en­deav­our and that we’re not in this for a quick buck.”

Whether the suc­cess­ful de­ploy­ment of the Naudé fam­ily’s first batch of wine will prompt other bou­tique pro­duc­ers to fol­low suit will be in­ter­est­ing to gauge.

Naudé says he’s not sure if the wine auc­tion con­cept will in­spire oth­ers to fol­low a sim­i­lar mar­ket­ing route. “I re­ally don’t know… but I reckon the risk is­sue is one fac­tor that might de­ter quite a few.”

Rar­ity fac­tor is key. Fran­cois Naudé ju­nior and se­nior

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