Start with £10m!
So goes the old wine trade joke about making money in the wine business.
And so it proves for both Constellation, owner of Hardys amongst others, and Brown Forman, owner of Fetzer, were both pulling out of non-USA wine interests.
Constellation which is meant to mean of stellar or star group has had less than stellar performance – they bought their wine assets for an estimated $1.8Bn AUS and have sold them for a reported £300m 6 years later.
Yawn – haven’t I heard this before – Seagrams (Montana & others), Allied Domeq, Diageo, Fosters (Beringer Blass), Southcorp (Penfolds) have all been there, but why oh why does big business not learn about the wine business. Consistently over the last 40 years big business has ploughed mountains of cash into wine with big plans and ideas massive expansion particularly on production plant.
Whilst the rest of the commercial world moves on and looks for ways in which it can serve better and therefore make more money the wine business sticks in the treacle looking at the consumer market, running the other way and loosing vast quantities of money in the process.
It is nothing short of pathetic. Isn’t it about time that we looked to the consumers to create value not to vines, production facility, stainless steel, grape varieties?
Sainsburys was reported to have overtaken market share of ASDA over Christmas with a stellar performance. What did their CEO Justin King say – we are not here to over take ASDA or anyone else, but serve our customers better, because if we do that then they will reward us with spending more money in our stores.
Wine is simple like any other area – let’s concentrate on what customers want… flavour, taste, re-assuring their purchase, special. That is the way to create value!