Wine exporter spells out success formula

With South Africa’s traditional markets still reeling from the global economic meltdown, a viable and relevant product is essential for successful exporting. It was with this in mind that Marius Louw, managing director of Du Toitskloof Wines near Rawsonville in the Western Cape, set about transforming his product for the international market, ensuring an export market for years to come. “I think we are in the fortunate position that we are not necessarily dependent on exports as the bulk of our product is sold locally, either in bulk or in bottle,” he said. “But growing our export market is very much a part of our future growth strategy and it was imperative that we looked at innovative ways of entering the well-established European market that at the same time is facing a tough economic time.” The company entered the export market just over five years ago and figures are showing a steady increase. Currently 20% of the wine produced annually is exported, and the intention is to continue growing exports. But competing from South Africa with the likes of established wine-producing regions like France, Spain and Portugal is not an easy task. “Our wine is just as good as the product being produced in mainland Europe – if not better – but how do we compete when it comes to cost? Not only are we far from our export market, we also have some of the highest logistics cost in the world,” said Louw. “It is just not possible to sell our product at the same price, so we set about changing our export profile to allow us to be more competitive in the European market.” Producing some 3 million litres of wine every year – of which more than 2 million litres go to the local market – Louw and his team decided to look at bulk exports versus containers moving bottles of wine. “We use a combination of both, with some of our product still being bottled locally before being exported in containers, but most of our export wine is now shipped out in bulk. Not only does that allow us to move more product at a time, it is also more cost-effective and the wine is fresher when it reaches the consumer.” With bottling plants in the UK and Germany, Louw says they are now able to actively compete in the market by bringing product to the consumer that does not cost an arm and a leg. At the same time the development of cheaper packaging has been part of the innovative process. “The tetra pack is a lightweight disposable packaging for our wine that is far cheaper for the consumer. At the same time it is a “greener” option and it allows us to compete in a different league in a remote market.” And the rate of sales of the new cost-efficient packaging has exceeded expectations. “By using a cheaper packaging we are at the same time making wine more accessible to the general public. No longer do you have to be a connoisseur to enjoy a good glass of wine. Through this process we have not only managed to be a viable exporter to Europe, we have also introduced an affordable wine that is easy on the palate and that can be enjoyed by the average person.” For him successful exporting lies in knowing one’s product. “As exporters there are things we have some control over and then some things we have no control over – like the volatility of the exchange rate. Ultimately, if I want to be successful, I need to shape my business model to accommodate those factors that I can’t control.” For that reason the company has embraced a culture of shipping “just in time”. “Yes, it is risky should there be a strike at the port, but on the other side of the coin I am sending fresher produce more frequently and I am not spending huge amounts of money on warehousing and other costs.” For Louw it comes down to knowing what the risks are and then taking calculated decisions that suit one’s individual business model. CAPTION Marius Louw … ‘By using a cheaper packaging we are making wine more accessible to the general public.’