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Distell SA wines regrouping targets premium growth

South Africa-based Distell has set up a new entity, Distell Vineyards & Estates, with major plans to increase its footprint in premium wine sectors in international markets. David Longfield reports

Ross Sleet Cape Legends, Distell

Aiming to fill a niche in premium wine markets internationally, Distell announced in early September 2014 the reorganisation of its high-end wine properties and brands into a new business unit, Distell Vineyards & Estates (DVE).

The company – South Africa’s largest producer of wines, spirits, ciders and RTDs – will use DVE as a vehicle to highlight the diversity and depth of its premium wine portfolio to markets around the world, as well as exploiting wine tourism opportunities for itself and the South African wine industry as a whole.

The DVE portfolio incorporates Distell’s existing Cape Legends wine range – including long-established names such as Allesverloren, Flat Roof Manor, Jacobsdal, Le Bonheur, Neethlingshof, Plaisir de Merle, Pongrácz, Stellenzicht and Uitkyk – as well as others that it part-owns or represents internationally from a marketing and sales perspective.

In London ahead of the annual Beautiful South trade tasting, 10-11 September 2014, DVE set out its plans to increase its value share of the South African premium wine sector in UK retail by more than threefold by mid-2017, from its current level of 4.5% to 18%.

 

United front

Grouping together as many as 20 different brands – ranging from the accomplished Pongrácz Méthode Cap Classique sparkling, to Fairtrade varietal range Place in the Sun and heritage-led labels such as Durbanville Hills – does present DVE with challenges in terms of presenting its whole range in a cohesive way.

The full DVE range is capable of ticking the boxes of buyers in most distribution channels, but their respective demands on labels, branding and marketing in general vary widely, according to their ultimate destination.

Ross Sleet, marketing director for Cape Legends, was in the UK in September 2014 to brief potential partner agencies and the trade and press on the company’s new strategy. He spoke to The Drinks Report about DVE’s early plans for packaging and presenting its newly unified wine range.

 

The Drinks Report: Does Distell’s reorganisation of numerous wine brands under the new DVE umbrella have implications for the packaging of the ranges involved? Will we see a ‘group rebranding’ to unify the look of the whole range?

Ross Sleet: The reorganisation will not have an impact per se, as our developments in this regard are ongoing and continuous. Our portfolio is, however, undergoing a general revamp across all brands as our positioning as South Africa’s premium wine company demands that we pay close attention to packaging in all its formats. It is unlikely that we will have a group rebranding as our brands are too diverse to benefit from this type of exercise.

 

TDR: Does marketing these wines all together as a group present difficulties in terms of packaging and/or message when you are targeting more than one market of significance?

RS: The main issue that we bump into across our portfolio is that creating a brand look and feel for one market may not translate well into another. We export wines to 65 countries all over the world and the African aesthetic and the Chinese aesthetic, for example, are vastly different. In addition, our wines sell in all channels, so what works on a supermarket shelf doesn’t necessarily work on a fine dining table. This isn’t a new development for a wine company but our range of 20 brands and over 220 SKUs makes it a rather special challenge.

 

TDR: Are you likely to deploy selected labels in the new DVE group to target certain markets more or entirely?

RS: This is an approach we do adopt in some markets and channels but this is usually deployed on a brand level and not on a label level.

 

TDR: How do you approach the differing requirements of on/off-trade channels when grouping wine brands together in such a way as with DVE?

RS: The on-trade vs. off-trade debate often makes it necessary for us to deploy different labels in these channels. We also prefer to deploy brands in channels and markets in conjunction with our agents and distributors, so we often have some brands grouped together in order to provide a South African solution, which our portfolio is easily able to provide.

 

TDR: Will the new DVE grouping lead to economies of scale for you in terms of the costs of packaging and its development?

RS: We do benefit from our scale and we have seen this across all development and design areas. The danger is that suppliers often think that being a bigger business means that we have bigger budgets, which is not the case! Managing these costs is an ongoing battle.

 

TDR: What is Distell/DVE's attitude towards lightweighting, choice of label substrate/adhesives etc, or other methods of reducing packaging costs and impacts of its wines?

RS: The costs of packaging, especially in South Africa, escalate year on year so we are forced to continuously drive costs down in order to maintain margins. Lightweighting innovations usually come to us via our suppliers and that’s something we continuously look for in order to both manage costs and environmental impacts.

 

TDR: Are there any specific brands within the new DVE group that you are looking at as a priority for rebranding/new packaging?

RS: We are in the process of rebranding one of our Fairtrade brands, Place in the Sun. This will hopefully be done before Christmas 2014.

 

TDR: Does 'tradition' help or hinder when it comes to redesigning South African wine labels?

RS: Having a number of brands that are ‘heritage’ brands does add a level of complexity that other businesses don’t necessarily have. We do try and respect the history and tradition, for obvious reasons, but all brands need to evolve, so innovation is again a continuous process. Some designs we tamper with at our peril as some of our brands, such as Zonnebloem and Alto, have distinctive designs that have been around for over 60 years. Consumers know these labels and hence we don’t fiddle with these brands too much.

 

 

Lofty ambitions

Germany, the Netherlands and Finland will be priority markets for DVE, but its prime target is the UK. The company’s newly appointed chief executive Carina Gous says: “The UK remains the most important market globally in terms of positioning premium brands. Wines which perform well there are noticed by the rest of the world.”

While acknowledging that the UK remains a “tough market”, Gous says DVE will not be “chasing short-term gains”, but intends to enact a “consistent growth strategy”.

The company cites statistics from Nielsen showing UK sales of South African premium wine (above £5) account for 14% of total South African wine sold in the UK, with the segment growing at a rate of 23% per annum.

Seeing its future in the added-value channels, DVE also has designs on moving its portfolio towards the on-trade sector. Gous asserts: “The UK remains the single most important market globally in terms of positioning premium brands. It’s a market with a burgeoning culinary scene, which is exactly where our wines have great success.”

Gous admits the company’s growth target is “ambitious”. But, she says: “I believe that we can achieve it by continuing to invest in on-trade and independent merchants and putting more feet on the ground to spread the word.”

DVE’s Cape Legends wine brands form South Africa’s largest fine wine business, with sales in excess of R550 million (£32 million), representing over one million 9-litre cases. The company’s sales are currently split equally between export and domestic, with the wines of the Cape Legends portfolio sold in 65 countries around the world.

Within the Europe region, Cape Legends enjoys “significant market share” in Sweden, Norway and the Netherlands, markets traditionally strong for South African wines, and the company is also targeting further opportunities for growth in up-and-coming markets such as Nigeria and Kenya in Africa, as well as Canada and Japan.

The full Cape Legends portfolio can be viewed at: www.capelegends.co.za

 

30 September 2014