January 31, 2007
Getting your hands on a bottle
This is a view of last year's South African wine trade fair Cape Wine 2006. This one of hundreds of trade fairs that showcase wine producers' goods to potential importers, distributors and retailers all over the planet. Everyone behind these counters is hoping that someone with a route to customers will fall in love with what they are doing and a fruitful relationship will start. Its a bit like a teenage dance.
The rules of how you get wine to shops in the USA where people can buy it are very complex. It requires many thousands of people to make this system work.
There are more people working in liquor distribution in the US than work in wine production in South Africa, and we pick almost all of our grapes by hand and most cartons are filled and stacked by hand.
Though this is a giant American business, there are only a small number of importers who can show your wine to the multiplicity of distributors.
That makes these importers very powerful.
How do you get one of them to know who you are?
In the UK and Holland, and to a lesser extent, in France and Germany, the route to market is dominated by half a dozen major buyers in each country.
If you think of all of the brands of wine out there, being made in Italy, Greece, Spain, Portugal, South Africa, Australia, Rumania and so on, maybe a million brands all together, how are they going to find a way to the customer?
January 29, 2007
While Hugh is Preparing to Make Love
While everyone is busily preparing for the Friday launch of the Love Tour and filming of our first movie, I'm off to the Ad Age Marketing 50 awards luncheon tomorrow in New York, where I'll be picking up our award as one of the top 50 Marketers of 2006.
The great part of receiving the award is the company that we are in, to mention a few:
and one of our favorite retailers: Trader Joes
I'll have to watch the Love Tour online as I am off to Cape Town after picking up the award. Harvest is two weeks early and we are aleady crushing pinotage.
January 28, 2007
Web 2.0 and Choking The Chicken
I know I deserve a good slap for my tardy posting, but late last year I attended the Wine Web 2.0 tasing in San Francisco, sponsored by Cornelius and Co., at Radcru.
I had the pleasure of meeting a number of producers doing cool things with their wines, although not many really doing much with web 2.0. One exception was Jeff "El Jefe" Stai, the aka "Pimp Daddy" (he's got more aliases than Crime Solvers), Jeff writes the very good El Blogo Torcido for Twisted Oak Winery.
We chatted about the marajuana crop, spanish grape varieties in Calaveras county and, of course, how to best choke a chicken. Here it is, care of our friends at Youtube:
January 25, 2007
road trip dates confirmed
[Click on image to enlarge/download/print etc. Licensing terms here etc.]
My dates for my Stormhoek Valentine's Roadtrip have been confirmed:
February 2nd: Inverness, Corstorphine [Edinburgh].
3rd: Newcastle, Durham, Tadcaster.
4th: Blackpool, Bidston Moss [Merseyside], Horwich, Warrington.
5th: Stockport [Manchester], Altrichham [Manchester], Redditch [Worcestershire], Cardiff [Wales].
6th: Yeovil [Somerset], Bournemouth.
7th: Purley, Gatwick, Chichester.
8th: Sandhurst, Bursledon, Cirencester.
9th: Reading, Newbury, Abingdon.
10th: Barr Hill, Royston, Watford.
11th: Aylesbury, Ipswitch.
12th: Cheshunt [Herts.], Colchester.
13th: Pitsea [Essex], Twickenham.
14th: Brooklands [Surrey], New Malden [Surrey].
You can download a more detailed itinerary here: [Word Document].
Cut and paste the postcode in the Word doc into Google Maps or Mapquest to get super-precise directions. If any bloggers want to meet me in Tesco's while I'm there, or maybe a drink in the evening, just phone me on my mobile on the day +44 (0) 770 309 9462.
We knocked down the final number of stores I'll be visiting by about a third, sadly. In the end we decided we wanted to spend more than ten minutes in each store, so there was really nothing else to do.
If this goes well, there's already talk of doing something similar in both Germany and the USA. The virus spreads.
[This was originally posted on my personal blog, gapingvoid.]
Old part of town, new life
Signal Hill, South Africa's newest winery, is in Cape Town's historic centre. Photograph by Andrew Ingram
The old financial heart of South Africa, the couple of blocks bounded by Adderley, Burg, Wale and Shortmarket Streets, has a new winery.
In London, this part of town is called The City. In Cape Town it’s called Upper Adderley.
It also has a couple of deluxe hotels (they’re described as 6-star in the brochures), a 400 seater, multi-level restaurant and plenty of smaller ones, plus all kinds of opulent decadence (pools, spas, cigar bars, whisky clubs). They are all new and they all look old.
They are in a development retaining all of the old colonial buildings while adding a heavy touch of lux on the inside.
You can roll out of goose-down dreamland, pull on your shorts in front of the harbour view and sip extra creamy latte while watching the harvest go through the tiny wine press.
This baby winery crushes grapes from 11 minute vineyards. Three of them are in the city suburbs, planted between the houses.
Signal Hill Winery belongs to Jean-Vincent Ridon, French-born Capetonian who inveigled for a city-centre winery for 10 years. And there it is.
Derick Henstra, Dutch-born Cape Town architect, designed the whole Mandela Rhodes complex with the wine cellar as its hub.
You will need to bring a French phrase book.
All of the wines have names like ‘Clos d’Orange’.
No screw caps here.
Made to fit
Each barrel is a hand-crafted masterpiece, made for the customer’s needs, in the same way that a Savile Row tailor makes a suit for you (well, perhaps not quite Thomas Mahon and English Cut, but I’m sure get the idea).
Every barrel you can see on the Devon beach above was made for a specific job.
This is how it goes. A winemaker orders a barrel, or 10 or 20, made from not just oak, but oak from a particular place, for the wine that he will make from a specific vineyard.
Different forests, growing at different altitudes and soils produce different textures and flavours in oak.
The customer specifies the wine he is going to put in it and asks the cooper to toast the barrel staves (planks) over a wood chip fire to an exact degree, like you ask for your meat to be grilled just the way you like it, such as rare or medium. He knows the type and length of toasting that he needs to suit the wine that will ferment in there.
When the barrel is finished it is checked to see that it is ‘winetight’. And then it is wrapped in plastic and labelled with the customer’s name, plus the treatment.
Looking at the MSC Napoli mishap on the bright side, wine lovers who complain about too much oak in wine should be happy with the 2007 whites from South Africa.
And no top garden in Devon will be complete without a thousand dollar barrel feature.
January 24, 2007
Looters take home booty, while barrels for South Africa's best whites float by.
Photo by Tom Hurley
Temperatures are rising. In thermometers and in winemakers’ pulses.
Where are the barrels?
The grapes are nearly ready. The green is turning golden. The space in the barrel room is ready for the expected new white wine barrels.
But the barrels are on a wintry beach, on England’s rocky south coast.
Winemakers order their barrels hand-made from French coopers to arrive in the last week of January each year, 2 weeks before the juice is ready for them.
The bad news is beginning to spread around.
More than 2000 barrels destined for South Africa’s premium white wines left France last week on the MSC Napoli, as part of the 2400 container cargo bound for Cape Town.
The ship was broken in two by storms last week and lies, tilted at 35 degrees, on Devon beach.
I used to be involved in the barrel business. I know that every day this week importers will be fielding calls saying something like “Where are my barrels?”
The sad news is that the barrels are not coming.
We’re going to have to learn to like tank-fermented Chardonnay.
January 20, 2007
Brand Premiums: The Petrus Formula
Been thinking about Bordeaux again.....
We know what it takes to make a case of wine: Grapes, barrels, some labor, a place to make it, bottles, corks, etc. When we’re passing the time driving around wine country, we flip between playing “I Spy” and some number games. It keeps the mind fertile and out of trouble. So, when it was announced a while back that the price of Petrus 2005, en primeur (that means that you have the honor of paying for the stuff two years before you’ll ever see it) was about $35,000 per case, all we could think was: For fucksake, Let’s run the numbers.
So, here are the numbers as we see it: Grapes: the most expensive run about $70.00 a case. Overhead $25.00, Barrels are expensive, so add about $30.00. And nice bottles like the ones they use, run about $8.00 a dozen. Okay, good corks are a bitch to find these days, so I’d say another, $15.00 for the best corks.
Running the abacus over those numbers comes up to about $148 a case of cost. I just don’t know what else to add. I mean, you could add the foie gras, limos, hookers for the good clients, but none of that is really wine cost. So, let’s assume for the moment, that the winery gets about $30,000 of the sales price per case, then their margin is about $29,854.00, per case.
Now, the question is: How many cases do they make? We will never really know for sure, but we do know that there are about 11 hectares and given smallish yields, a safe number is 4,000 cases. So, 4,000* $29,854= $119,416,000.
Based upon that somewhat stupefying number, we can't help but ask ourselves: What does this mean le petite maison is worth?
Petrus being a ultra luxury brand and truly one-of-a-kind, arguably should command a greater multiple of earnings than say Gucci. Vuitton, etc., while it would be possible to create another Gucci, there ain't more land being made in Pomerol, so creating another Petrus would be nearly impossible.
However, just to be conservative, after having a look at market caps for luxury goods businesses, we'll apply a run-of-the-mill multiple of earnings for a super-luxury brands of about 25 times. Therefore, based upon current sales, Petrus, with its 4,000 case business is worth somewhere around a cool $3 Billion. Just to have a good chuckle, take a look to see where they'd be on the FTSE/NYSE large cap list
So, for all of our friends making a few thousand cases of wine out there. Don’t worry that you can’t pay your bills, just keep doing it long enough and maybe your 3,000 cases will be work a cool $3 billion. We can only live in hope.
We were thinking about running the abacus over the Romanee Conti numbers, but maybe we'll save that for the next long drive.
BTW, we're going short on 2005 Petrus.
January 15, 2007
Hard to get a drink
Liquor laws are different wherever you go. In South Africa, liquor (that’s wine, beer and spirits) can’t be sold in an off-license on Sundays or public holidays.
Except for a couple of exceptions.
In Cape Town, Harley’s is one of a few places where they can sell wine and stuff for several hours on these forbidden days.
This year New Year’s Day was on a Monday. That means that most of Cape Town had to buy what they needed to celebrate before or during Saturday. If you forgot or didn’t buy enough you had to drive all the way to Harley’s.
I went past Harley’s a couple of times on January 1 and each time there were crowds of people staring at the closed doors.
Inside, the place was seriously busy. When some customers were let out, some more were allowed in.
The management told me that it was important that all the customers who left with bottles had paid for them first.
January 9, 2007
My Vid is not as interesting as Daniela Ciccarelli, but it was National TV
Just before Christmas, I got a phone call from a woman named Natasha, who said she was Channel 4 TV producer, asking me about my views on viral marketing and a flap over a glitch on the Hamley’s site. She was asking whether it was a real glitch or just a PR ploy.
I guess I gave her the answers she was asking for, as a little while later she called to see if she could send me a car to be on the noon news. I hastily replied, “Sure, no problem”, and as I put down the phone, I started to sweat.
Despite the fact that it wasn’t yet 11:00am, two hastily consumed glasses of Pinotage reassured me that I had made the right decision.
The car showed up and I was driven to a TV studio in Kings Cross, where upon my arrival, I was whisked into makeup and before I knew it, I was sitting in front of Samira Ahmed. She started firing questions at me.
As you can imagine, I wasn’t all that interested in talking about Hamley's; what was on MY mind was the Thresher's Virus and spelling S-T-O-R-M-H-O-E-K very slowly for all of the viewers (who watches the noon news on a Tuesday anyway?).
You can see for yourself, Samira had her agenda and I had mine, and somewhere for a few seconds, I think they met, but just as I was going to go into a schpiel on the Cluetrain and online communities, the interview was brought to an unceremonious halt.
45 minutes later we were having our office Christmas lunch. Our buddy Joe Wadsack, who is a real TV celeb joined us. He's promised to guest blog for us. Not a bad turn of events.
Now for the main event:
[Click here to watch. Its not work or family safe.]
Unless you’ve been living under a rock over the last week, you’ve have heard about the fracas over the recently banned, Daniela Cicarelli vid. Some guys have all the luck ;-)
love reaches into far deeper places than trust ever could
We're launching our first label at the end of this month, with a Valentine-related theme [the image above is not it, I'll let y'all see it closer to the date etc]. It'll be going into Tesco's, the UK's largest supermarket chain.
All very exciting. Two points:
There will be a noteworthy promotion. Not being the type of folk to sit on our bottoms all day and wait for the results to magically happen elsewhere, we're going on the road. Namely, I'm going on the road.
Think of it as a bit like a book tour. Except instead of visiting bookstores, I shall be visiting Tesco stores. And instead of signing books, I shall be signing this new commemorative edition of Stormhoek lithographs that I'm currently working on, to any shopper who wants one.
I am hoping to recruit Colin Kennedy of Get Your People fame to accompany me, as traveling companion, assistant, and the guy who holds the camera & mike during podcasts. We're meeting next week or so to discuss.
We kick off the tour circa February 1st, and hope to visit 50 Tesco's stores by Valentine's Day. It'll be busy, that's for sure.
We're not just launching the new cartoon series around Valentine's Day just for the usual holiday-promo reasons. Like I said earlier, in this brave new world of ours, LOVE is, or should be, at the center of marketing. My buddy, Tara Hunt once famously said that "Trust is the new currency". A nice thought, but I disagree. Love is where it's at. Love reaches into far deeper places than Trust ever could.
Of course, I don't just mean romantic, sexual love. I mean human connection. If you don't have that, like Saint Paul once said, you have nothing.
And why do people drink wine together? The same reason people write and read blogs. Connection. Human connection. That means "Love" on some level, whether you care to admit it or not.
Music may be food of love, but wine is the drink. Welcome to the heart of Stormhoek marketing.
We live in interesting times.
[This was originally cross-posted on my personal blog, gapingvoid.]
January 8, 2007
Greed and Good Weather Make for Bad Bedfellows
The December issue of Wallpaper* had a piece called “Hot Cities”, a visual and numerical rundown of 2006 summer high temperatures, compared to the historical average: (for our American friends, multiply the degrees C by 9/5 and add 32, [ You can do it in your head after a while] :-)
Stockholm: 32.3C vs. 21.3C
London 34.5C vs. 34.5C
Kiev 31.7C vs. 24.0C
Madrid 40C vs. 31.0C
Berlin 36.6C vs. 23.0C
At this rate, they'll be planting pinot noir in Stockholm soon.
It reminded me of a post that I wrote in the middle of the sweltering European summer, but sat in drafts:
It’s ironic that what makes Bordeaux so valuable is not that it is so fantastic, but that historically, it is infrequently so fantastic. A couple of times a decade, “the vintage of the century” rolls around and the wine pundits go into their frenzied, frothing at the mouth state of jubilation about how amazing the wines are.
The language and currency of Bordeaux is about scarcity. The wines are released to the market in an archaic way that is designed to maximize the value of each case and allow the brokers to leverage the bad vintages with the good scarce stuff.
We can count the great vintages of the second half of the 20th century on two hands and a couple of toes.
So what happens when, the weather ‘improves’ and instead of two or three great vintages a decade, there are 8?
Well then, its becomes much harder to play the scarcity card.
Good wine becomes the norm, instead of the exception. The Bordeaux model starts to falter. There is more wine than there is demand at high prices and prices for the best stuff drift downward.
'More and better' probably isn't good news for the Bordelaise.