Opportunities for black entrepreneurs to enter global markets.
With its first vineyards established in the 17th century, today South Africa is a significant global player in the wine market. It is the seventh-largest wine producer in the world, and accounts for 3.9% of global wine production (Italy leads the pack at 19.1%). The industry contributes R36.1 billion gross domestic product (GDP) to our economy, employs more than 300 000 people, and exports almost 430 million litres of wine every year. These staggering numbers tell a story of success and opportunity. But transformation remains a challenge for the industry.
According to the State of the Wine Industry Report
, produced by VinPro: “Notwithstanding various initiatives to support existing enterprises, as well as new opportunities, the total level of transformed ownership remains low at 2%.” This is a shocking statistic, given South Africa’s transformation agenda. But all is not lost. There are endless opportunities for black entrepreneurs to seize the moment and take advantage of this massive transformation challenge by participating in the industry. Start a wine label or become a wine producer
While creating your own label may sound daunting and expensive, research shows that there are baby steps that any entrepreneur can take to become part of South Africa’s wine success story. An aspiring entrepreneur with significant access to capital, could consider joining the industry as a wine producer, which means that they would need to own the land with vineyards, a cellar and the technical facilities to produce wine. There are a number of funding mechanisms that entrepreneurs can explore, but for most people, funding remains a major impediment.
The second, more accessible model is to establish a wine brand by partnering with existing wineries to purchase specific wines from them, thus using a less capital-intensive method to start your journey towards owning a wine business. A typical wine brand enterprise has low operational costs and is managed by one or more people, because the technical winemaking capabilities are left to established farms and wineries that already have resources and fulfil all the regulatory requirements.
Rosemary Mosia, founder and CEO of The Bridge of Hope Wines decided to pursue the wine label route because she did not have access to capital. “I started the business without any external funding,” says Mosia. “I took my package and pension to get the business off the ground. I realised that without ‘old money’, I could not afford to invest in a winery or farm, and so I consciously decided to focus my energy and resources on building a wine label as opposed to seeking funding for a capital-intensive wine farm. It’s a complex value chain, from harvesting to bottling – the process is highly specialised and requires relevant expertise, so I had to fast-track my knowledge about how the industry operates,” she says.
This Master of Business Leadership graduate became intrigued by wine when a friend invited her to a winery in Stellenbosch, where she immediately spotted an opportunity not only to learn to appreciate wine, but also to make money out of the experience. She moved to Cape Town and invested time and energy in learning about the industry, reading and talking to industry experts. The value of partnerships in creating a wine label
Mosia says that she got to understand the value of partnership from the very first day in business. “I learnt that I needed a credible partner who would support me in producing the type of wine I wanted to put on the market. I approached Linton Park Estates in Wellington, which has a rich heritage, having been in business since 1699. I invested in building a relationship, based on trust and respect,” she says “A lot of wine label owners struggle to earn the respect of wine farms. I knew I had to collaborate with the winery so that I could be involved in the entire value chain. I don’t simply buy their wine, I participate in the entire process. In a sense, I employ their winemakers to make things happen. I also consistently have to form relationships with wine importers, who have a deeper understanding of their markets. You need a local who understands nuances of patterns and culture,” Mosia explains.
Winemaking processes such as harvesting, crushing and pressing, fermentation, clarification, ageing and bottling are left to the well-resourced entities, giving her more space to build her business, create and promote a brand, establish partnerships and distribute the product to her chosen markets. “Given the high demand for South African wines globally, you need to understand how to promote your wine internationally and familiarise yourself with trade shows. I also use digital marketing to position The Bridge of Hope Wines globally,” she adds. The brand story
“The Bridge of Hope Wines’ promise to customers is ‘we will take you there’, which embodies the bridge of delivering a wine full of flavour and character to move customers from one matchless taste sensation to another. When you take a sip of our wine after a long day, you’ll get a sense of hope. It will take you from a tense exhaustion to a tranquil and soothing point,” explains Mosia. “I named the brand The Bridge of Hope Wines, inspired by the need I saw when I worked for Transnet for bridging finance. So, I figured that I needed to build something that would enable people to have lasting experiences.” Distribution
Mosia says that The Bridge of Hope Wines currently distributes its wines through a variety of channels. “There are restaurants in Johannesburg and Cape Town who prefer our wines, so we are on their list,” says Mosia. “We also have online distributors who buy our wine and sell it at their own price. Our biggest challenge is to get the product on major retail shelves, and we are relentlessly in negotiations with retailers – it’s a lengthy process, but we will get there.” Export markets
Breaking into the competitive international market is not easy, but for Mosia, it is encouraging that The Bridge of Hope Wines are in demand internationally. She has spent several years promoting the brand around the world in China, Singapore, Malaysia, Italy, France, Belgium, Germany, Vietnam Bangkok, Brazil, Hong Kong and the USA, and has also visited Kenya, Nigeria, Tanzania, Uganda, the Democratic Republic of the Congo, Lesotho, Ivory Coast and Ghana.
“We export 65% of our wines,” says Mosia, “and we expect that number to grow. In fact, I’m currently in negotiations with Walmart in the USA, and they are keen to list our wine but have stringent value chain requirements which increases the price.”
In terms of transformation in South Africa, Mosia says she’d like to see more young black people enrolling for viticulture and wine studies. “We’ve began the process of creating interest in young people through our NGO, through which we help them understand that winemaking is a science and a business in which they could create wealth and change lives,” she says.
While access to funding remains a significant barrier to entry for aspiring entrepreneurs who want to start their own labels, thriving business owners like Mosia provide hope, that with a vision and determination to make sacrifices, establishing a wine label is achievable, especially given the increasing demand for South African wines globally. This article was first published in The Afropolitan Magazine. For more information visit www.afropolitan.co.za.