The Buyer
How Romania’s Cramele Recas’ market first strategy is working

How Romania’s Cramele Recas’ market first strategy is working

Romanian wine producer, Cramele Recas, stands out from its competition for a number of reasons. Most notably for being its country’s largest wine exporter. It can also lay claim to be a vegan wine producer, on the verge of becoming organic and capable of making a vast swathe of different styles of wine from orange to natural wines, through to supermarket best sellers and Gold medal winning wines in the major international wine competitions. But as we discover, in the latest The Buyer video interview, its owner Philip Cox, has a 100% market-driven focus that allows him to keep at least one or two steps ahead of what its customers might ask for next. He is joined by Matt Johnson, head of his UK team, who explains how going direct to consumer is one of the biggest lessons they have both learned from the Covid-19 pandemic. Together they are prepared to take on the Covid-19 and Brexit challenges that lie ahead, as Richard Siddle reports.

Richard Siddle
28th September 2020by Richard Siddle
posted in People,People: Producer,

Philip Cox of Cramele Recas is a rare breed. He listens intently to what the market is saying and what major retail and on-trade buyers are going to want next and then sets out to make it.

(Click here for the full interview between Richard Siddle and Cramele Recas’ Philip Cox and Matt Johnson).

If you are involved in buying and selling large volumes of wine from Europe into the UK then you need to make sure you listen to what Philip Cox has to say. For whilst the country where he makes his wine – Romania – may not be in the top 10 wine countries in the UK– his influence and knowledge of what is selling is arguably better, or as least as good, as anyone in the industry.

Cox usually goes about his things quietly, and under the radar. But dig into who he has done business in the UK with, then it is probably easier to make a list of who he has not worked with. The major supermarket chains? Tick. National pub groups. Tick.The hard discounters. Tick. Specialist retailers. Tick.

In so doing he has built up over 20 years of experience (Cramele Recas started in 1998) of working with major wine buyers, not just in the UK but in markets all over the world, getting to understand what it is they are looking for what he can be doing to provide them with the wines they will be looking for next.

For Cox and his wife, Elvira, it was the only way to go when they first took over what had been a state owned winery, along with two Romanian partners. They might have acquired 600 odd hectares, but they had no customers as all the wine had been going to the bulk market.

So step by step they went, listened to what customers wanted and then set out to make it. In so doing they have spent €50m over the last 20 years and transformed it into what Cox says is the largest privately owned winery in Eastern Europe, producing 30 million bottles a year, with grapes coming from 1,250 hectares generating €30m in sales.

(Click here for Philip Cox talking about the story of Carmele Recas and its business strategy)

Market driven
Thoughout our interview he keeps coming back to the ‘market’ and making wines that are relevant and important to the many retail and on-trade customers he has. Yes, he can talk about terroir, soils and the intricacies of winemaking, but what makes Cox stand out is he can talk the language of wine buyers and understands what they want.

In fact, he says, all the 30m bottles that Cramele Recas produces can be described as “bespoke” as they have all been made with a particular customer in mind. Which means it is currently working across 250 different labels for markets around the world.

If he had the time Cox could probably write an invaluable report on the drinking habits and personal preferences of all the main wine drinking countries around the world. Be it, as he says, the Japanese who can’t get enough of orange and natural wine, the Romanians who have fallen in love with rosé, the Germans who want Sauvignon Blanc, whilst in the UK it seems to be “all about Pinot Noir and Pinot Grigio”.

It is also striking that he has chosen recruited Matt Johnson to head up his UK team, and to be his ears, eyes and negotiator on the ground. Previously Johnson was doing just that for Copestick Murray, prior to its merger with Freixienet UK, and has the market nous that Cox wants.

Business as usual

With so much of its wine coming to the UK it is reassuring to hear that Covid-19, other than preventing travel and going to major trade shows, has not had a detrimental impact on his business. Apart from a few short delays here and there, wine orders have kept flowing and by using online platforms such as Zoom there has been little disruption to how they would normally have operated over the last six months.

In fact Cox says its overall business is up around 5% to 10% so far in 2020 and that has been driven by more by exports than its domestic sales. But “having lots of eggs in a lot of baskets” has proved to be a good strategy to ride through what has become a global pandemic.

Johnson says the biggest difficulty in the UK has been more in the on-trade and being able to get out to key accounts as they were either shut, or too busy setting themselves up again.

But he has noticed a marked shift in recent weeks from major buyers who are through the fire fighting and keen to look at longer term projects in 2021. “Last month was our busiest in terms of sales, so that’s positive,” he says.

He also has been able to get new listings with new retail customers agreed to bring in early next year, so things are certainly changing “moving in the right direction”.

Cramele Recas has built itself up to be Romania’s biggest winery with partners in multiple markets around the world

Ultimately, he says, it is about getting the wines in front of people as that is when they are blown away first by the quality, and then backed up with “really competitive pricing and packaging” and all the relevant accreditation you need. J

Johnson says he is particularly encouraged by how open major buyers in the on-trade are, from both big and medium sized chains, to look at indigenous varieties from Romania, particularly for exclusive labels where they might have a blend of a well known variety such as Sauvignon Blanc, but then blend it with a local variety like Fetească Regală.

“It’s what we specialise in – creating exclusive labels with a great back story that are really interesting and innovative.”

That’s what is attracting new on-trade customers to the table, adds Johnson, now that they are back off furlough and happy to pick up conversations they were having earlier in the year. But staying engaged with them throughout lockdown has been “imperative” in them being able to pick up where they left off, he adds.

Cox says he is seeing a similar interest from major supermarket and discounter buyers for indigenous and local varieties.

Finding the right customers

The key to Cramele Recas’ growth, says Cox, has been finding the right customers to work with. It’s also been the hardest thing, particularly coming from Romania, and always having to get over the perception that this is a country capable of producing quality wine.

That’s where the time goes, building trust and proving you are capable of delivering and providing what they want from a country with no winemaking traditions to rely on, he explains.

(Click here for Philip Cox and Matt Johnson on Romania’s reputation internationally world and getting over prejudices )

He says perceptions are slowing changing, particularly in the UK where the trade has really opened its eyes to what Romania can do over the last five years. Germany and the US are also on a similar track.

Then there are those countries that have had long traditional trading ties with Romania, like Russia and Scandinavia where it has been easy to introduce its wines, he says.

Johnson agrees that it has been in the last five years that the UK trade has opened its eyes to what Romania can do, but that said there is always that extra level of reassurance that you have to give, particularly with younger buyers who are still “genuinely surprised” by what Romania can do.

International experience

(Click here for Philip Cox and Matt Johnson on how experience of working in so many markets helps attract new business)

Cox certainly believes having such a wide breath of leading customers in key markets around the world gives professional buyers a sense of reassurance that “we know what we are doing”.

“It’s an important part of the story to be able to show have a lot of experience working to the standards of the big companies we work with,” he explains.

Being able to show that you are able to reach the exacting standards of some of the world’s leading supermarket chains is definitely a good calling card when trying to get business in new markets, he adds.

We might know, for example, Cramele Recas for the work it does in the UK, but its biggest markets are actually in Germany and the Netherlands.

That’s partly why it has gone through the process of being certified organic as there is so much more demand from major chains to only work with wineries that are.

Johnson says its international experience also gives them the knowledge of how to introduce new wines, say into the UK, that might have been a success in other markets – like orange wines in Japan.

Going DTC

Being so close to the main wine trends it’s no surprise to hear Cramele Recas has not only enjoyed strong online sales during Covid-19 through its partnerships with the likes of Virgin Wines and Amazon, but it is now planning a direct to consumer consumer strategy of its own.

Which is actually more a partnership with Matt Johnson who is separately setting up a new business – Beyond Wines – with Alex Greenwho has recently left Freixenet Copestick, to source wines from producers and then sell some to the trade, but with a clear focus on going DTC.

In particular Johnson sees a real gap for wines in the mid to premium category that are hard to sell to the major retailers, but will work really well online. The hope being that if they do work and sell well it gives them the fire power to make a case to bigger on and off-trade operators to take on a similar but different label for themselves.

(Click here for Matt Johnson and Philip Cox on developing a DTC strategy and Matt’s new Beyond Wines business)

Cox says he is particularly excited about getting direct feedback from customers and finding out from them what styles they like, the grape varieties, the price points, all of which can help him make even more consumer focused wines in the future.

It is also a way to get past the more “rise adverse” “gatekeepers” that are not willing to take on some of their more local wines, he adds.

It is much in keeping with Cox’s overall focus on keeping one step ahead of the market and what might be down the road. He believes the big changes we have seen during Covid-19 are here to stay, as we look to live our lives even more online and through our phones.

Big changes ahead

He certainly believes the wine industry itself is going to through “big convulsions” which actually might not be a bad thing in term of recalibrating what has become a sector with simply too many wineries, importers and distributors. Yes, it will be sad to see businesses go to the wall, but it might help the industry as a whole become more “consumer focused,” he says.

(Click here for Philip Cox on how he expects the wine industry to contract with fewer producers and distributors and a bigger shift online)

Preparing for Brexit

For someone in the heat of Europe that does so much business with the UK it’s clear Brexit is a major concern for Cox and Cramele Recas. Whilst he is confident he is well placed to carry on trading and building business in the UK, he has been a loud and prominent figure in warning the EU and UK wine industries about the dangers that lie ahead.

Cox, in fact, was one of the first wine figures to really speak out about the folly of introducing a new paper-based system, built around the infamous VI-1 form, that will result in costly tests being done on every consignment of wine that leaves the EU from the UK. Be it a pallet or just a few cases of wine. They will all have to go through the same expensive laboratory test.

All of which, as he says, will add at least 20p to the cost price of sending wine to the UK and around 50p to the retail price.

If the planned VI-1 forms and other measures go ahead Cox believes it will mean a lot of “smaller and less professional wine producers” will not be able to do business in the UK. The fact that so many European producers are totally in the dark about what lies ahead speaks volumes, he adds.

Despite the difficulties ahead he is firmly committed to the UK market and, potentially sees an even stronger future for its quality but value for money wines if the UK, as expected, slips back into recession and there is less disposable income around.

(Click here for Philip Cox and Matt Johnson on preparing for Brexit and fears for EU producers and UK importers)

Changes to UK wine industry

Cox also fears the impact of Brexit on the UK wine sector could see some of the traditional agency and importer businesses go to the wall, as the costs, sums and margins of doing business with the EU will not stack up.

Which is why he is very much behind Matt Johnson and Alex Green setting up Beyond Wines to, as he says, “cut some of the wastage out of the loop” and for a producer become as “lean” and as cost efficient as you can.

He, and his fellow Romanian producers, also have a good track record in this area as they had to go through all the EU form filling prior to becoming a member in 2007.

Part or its pre-Brexit strategy is to make sure it has enough stock as possible in the UK before January 1, 2021, says Johnson.

Cox says that in a year and a half’s time the wine industry will look very different to what it is today. “It’s a huge double whammy situation right now…but we have to make it work.”

“It is imperative that we are innovative, we’re lean, we’re quick but also extraordinarily efficient,” adds Johnson, who points to one project which is to develop wine brands that can cross between the on and off-trades.

Looking ahead

Cox and Cramele Recas are also focused on keeping ahead of consumer drinking trends which is why it has switched its wines to vegan and organic production to keep in step with people wanting to know more about what they are eating and drinking. He is looking to introduce ingredients on its labelling and is working hard to be as low intervention as they can be in the winery.

He is going to start making orange wine in amphoras which all helps to get people interested and “connect with the consumer about it”. Cox is also starting to make organic beer and tap into the growing, discerning beer market.

But as the business grows so does its capacity to make wine, and in the last two years it has planted and bought 250 more hectares of vineyard and built two wineries, giving it an extra 7m litres of capacity. Next year it is introducing a new fully automatic bottling line run by robots.

“Our sales have doubled in the last four years so we have to build to keep up with it,” he explains.In fact it is a more a case of “them having already arrived” and they’re now busy building trying to catch up, says Cox.

Which is a nice problem to have.