Even a business as seemingly entrenched and successful as Origin Wine, one of the world’s most respected and successful wine producers, making wine in South Africa and South America and creating brands that sell the world over, has had to take serious action in the last 12 months to respond to the challenges thrown down by Covid-19. A key part of that response has been working with experienced winemaker and consultant, Clem Yates MW, on developing bespoke blends and wines for customers when buyers have been unable to travel, as Richard Siddle reports.
Origin Wine’s founder, Bernard Fontannaz, head of sales John Woodriffe, and consultant Clem Yates MW, discuss the challenges and opportunities that Covid-19 has created.
With the vast majority of its business running through multiple retailers, discounters and supermarket chains, the various lockdowns of 2020 and 2021 have actually been good for business for Origin Wine.
“It has been the best year we have had in the last five years volume wise,” confirms owner and founder Bernard Fontannaz . “We were very well positioned going into Covid-19 to be able to work with the retailers, the proverbial ‘right place at the right time’.
With the on-trade closed consumers had no choice but to turn to their tried and trusted major retailers to stock up on all their regular food, drink and wine. Be it in-store, or increasingly though 2020 home delivery.
Which has meant a lot more business coming the way of the retailers’ preferred suppliers, the companies they know and trust to deliver what they need when they need it. All those years of hard bargaining, long haul trips, ProWein dinners, and nights out at the London Wine Fair have paid dividends for those wine suppliers that have managed to get into Super League status when it comes to working with the major retailers.
But Fontannaz is not here today for a pat on the back. Like any good business entrepreneur he is thinking about the next 12 to 18 months and what Origin Wine needs to be doing now in order to both protect and grow its position. As John Woodriffe, sales director, says the ambition is to go again, and find ways to improve its position in what is going to be an ever changing market place, particularly with the on-trade slowly getting back to full business.
It is that level of uncertainty and not knowing what is going to happen to what have been booming off-trade and supermarket sales that has seen Origin Wine look to do things a little differently – and turn to wine consultant Clem Yates MW.
It is actually a bit of a surprise to see Yates, Fontannaz and Woodriffe together in the Origin Wine office in Banbury, Oxfordshire. Up to the beginning of last year Yates was a director at one of Origin Wine’s biggest wine supplier competitors, Off Piste Wines, and had spent the last few years vying for some of the same business that Origin Wine would have been pitching for.
For Fontannaz it is all about bringing in some fresh thinking to the business and potentially getting it to see things from another direction. As well as, of course, tapping into the winemaking and blending skills that Yates has made her name, initially as part of the award-winning Sainsbury’s wine development team and then at Off Piste.
“The market has been the most dynamic and reactive I have seen in the last five years,” says Fontannaz with retailers far “more responsive” than usual as they are having to think far more on their feet and respond to the latest lockdown and ‘timetable” measures introduced by the government.
Woodriffe agrees: “There are far more fast turnaround opportunities than normal. Like with the number of bag in box and WIGIG (when it’s gone it’s gone) projects we have seen. It’s all very stimulating and great to see.”
“We are always open to new ideas,” adds to Fontannaz. In fact, what would be seen as innovation to one supplier would be regarded as a bread and butter idea to Origin Wine, such is the amount of new products that it brings to the market.
Fontannaz admits it is in a good position: “It is very hard to get new business from a major retailer if you are not already in their mix.”
But equally it can’t rest on its laurels and assume that will be the case in a few months time. Hence why it has acted now to bring in Yates to help put it on the front row for new projects as and when they come around from the major retailers.
“If you are in the mix, you can capitalise on that by being involved in these quick turnaround programmes,” he says. “You need to be trusted to be invited to tender for these kind of opportunities,” adds Woodriffe.
Which also makes Yates an ideal addition to the team as she has all that experience working on such opportunities through her Off Piste days, but also knows what busy supermarket teams are looking for from her years working at Sainbury’s.
She agrees with Fontannaz that the retailers have really raised their game and responded to the demands of their customers by going out to source new and dynamic products. “There are a lot of things happening and retailers are reacting to having so many more customers in their stores,” she explains.
It’s also where she thinks Origin Wine has the edge over many of its competitors in that it makes its own wine, and can therefore control its own wine supply chain. This could be crucial, she believes, in securing potentially more private label and exclusive work than it traditionally has.
“Retailers are going to be looking even more for suppliers with the expertise and the quality to help them,” says Yates.
The same also applies for on-trade operators looking to find an edge when they come back, she adds. Why not focus on creating their own premium quality own label range which allows them to control their own supply, and cash margin? she asks. A premium own label range at a higher margin could be particularly beneficial to those operators who are looking to work with smaller wines lists and suppliers in the coming month, she adds
“Things are going to drastically change,” claims Yates and she believes Origin Wine is ideally placed to capitalise on it.
Which is very much the focus for Fontannaz, who sees Origin Wine’s biggest challenge being ready with a solution when retailer’s come calling looking for more wine to put on their shelves.
2020, adds Woodriffe, saw a lot of new product development brought forward just to fill “gaps on shelf” and to keep up with that saw, at times, an unprecedented demand for wine.
As a producer Fontannaz also knows where the problems are from the supply side. “South Africa is under pressure. It is losing shelf space and we need to make our own label more exciting and original. Whilst in Argentina we have the network and capacity to supply premium wines.”
Yates adds: “It’s really important for South Africa to develop a premium own label market. It is still too often see as the market for entry level bulk wines. But it is one of the most exciting wine regions with access to so many styles of wine to make something new and interesting.”
She sees great opportunities for South Africa at premium own label level – like a Sainsbury’s Taste the Difference brand at £7 to £10 – and then between £10 to £13 for Argentina.
Origin Wine needs to “change the narrative a bit,” admits Fontannaz. It needs to do more to explain it has its own single vineyard, organic, estates and get away from the perceptions that have built up around the business.
Origin Wine has also thrown down the gauntlet to Yates to examine its business, pick holes, look at how its winemaking teams are working and carry out a mini internal audit process on how it does things.
“We want to find ways to improve how we operate,” says Woodriffe, “to try and do better.”
Working with retail partners
Whilst Origin Wine has a good track record of working hand in hand with retailers on set projects and private label, it knows it can do more, which is very much where Yates comes in. There is an even bigger opportunity than normal to work even closer with retailers at a time when their buyers can’t travel to work on blends at the actual winery with the winemaking team.
That’s a role that Origin Wine hopes Yates can play, partly thanks to her years of blending and adapting wines to suit different supermarket needs.
As Origin understands its wines so well, it puts it in a unique position to work closely with buyers in developing new, exclusive and potential more premium blends. “It’s really a case of how can we things better for retailers,” says Yates, be it on own label or tertiary brands. “What systems support can we provide to help developing ideas together.”
Fontannaz believes its “vertical integration of supply” and “feet on the ground” in South Arica, Argentina and Chile means it is a position to supply wines where it can “guarantee volumes, quality and service” with brands that “encourage customers to trade up to more premium products”.
“We do plenty of own label at entry and premium level, but we have not been as strong as we could on our messaging. Bringing someone in with Clem’s experience is a great opportunity to do that with a new voice,” adds Woodriffe.
Boxes and new formats
Origin Wine expects some of this expected potential new work to continue to come for boxed wine projects and other formats.
Boxed wine have finally come of age during lockdown, says Woodriffe, as it has at last shown what a long term, durable alternative to bottled wine it can be. Ideal for when locked up at home for weeks on end. So much so that there has even been a shortage in bag in box packaging to keep up with demand.
Yates says she is particularly pleased to see the surge in sales for bag in box as it reflects the quality of wine that is being used and also has the double benefit of being environmentally friendly and good for recycling. “I think there is a real chance to develop bag in box at the more premium end,” she adds, and hopes more premium brands will give it a go to create a “halo effect” for the whole category.
Looking back on 2020 and it has been very much about getting your “demand planning” right, says Woodriffe. The same challenge still applies today, but it was particularly the case in the early months of Covid-19 when South Africa, Origin’s main source of wine, went into a full national and international lockdown.
Origin, like so many other wine producers and suppliers, have had to learn the hard way and make sure they have enough wine on the water at any given time when supplying, as Origin does, from South Africa, Argentina and Chile.
“We had a big spike in demand in the first lockdown last year and got caught out a little on long haul, but since then it has been a case of keeping ahead of our demand forecasts from our customers and factoring in a bit more than what they might ask for,” he explains.
As a producer Fontannaz is at the sharp end of weather, harvests, volumes and fluctuations in price as the different International markets respond to changes in supply and demand.
“We have had some challenging market conditions,” he says. “Argentina has had price increases to deal with in the last few years. In South Africa we have the knock-on effect of droughts and volumes. We had limited supply in South Africa two years ago, and pricing came under pressure. Now South Africa is back in full swing again, there is good market demand and we are able to supply what the market wants.”
It is these unpredictable combinations of factors that makes the wine industry so fascinating for the neutral, and hair raising for producers, brand owners and buyers.
Fontannaz says producers have both short and long term demands on the business and he hopes Yates can help with both. Initially with the work being done on blends and on own label projects with retailers, but then longer term what it is doing with its single vineyard wines.
Developing premium estates
For Origin Wine now has a premium estate, Finca La Anita to add to Mendoza Vineyards in Argentina, and Le Grand Domaine in South Africa.
It had hoped to make strides with both estates’ wines in the premium on-trade during 2020, but has had to put those plans on hold until the on-trade is fully back open again.
That said it is still has the fruit from the farms it can use to help both make its own estate wines, but also work into blends when needed.
Woodrifffe says they both offers premium wines to sell straight into the on-trade, but then can offer “something from the ground up” to retail customers.
Fontannaz admits that in the past it had look to “ring fence” its premium estates as being separate from its main business, purely for the premium on-trade, but now sees how it as working well across both on and off. “Private label opens doors for our premium branded offer,” he adds. “More importantly we already have the wine. We are not having to go out and find it. We just need to make our customers more aware of it. We have beautiful domaines in Argentina and South Africa.”
The last year has seen some strong own label wins for Origin Wine, most notably being picked up by Aldi’s global sourcing team to work with it in four markets across Europe. It is also now selling Malbec into the US through Aldi as well, says Woodriffe.
“We are showing, by example, that we can work in certain markets,” stresses Fontannaz.
It is all very well talking about all the great blending work you can do, the proof comes in the tasting. It’s why Origin Wine is organising a major tasting in the second half of May at its offices and inviting key buyers to attend, to go through the work it is doing with its producers and growers on the 2021 harvest.
“We are doing a lot of that pre-work now, picking out tanks, going through samples so that buyers can have access to all of that when they come here,” says Yates.
“It’s our way of coming out of Zoom and bringing the wine to them at this time,” adds Fontannaz. “It will be like a mini visit to South Africa and Argentina here from our office in Banbury. So we want to create that experience here. It’s also at the time of the year when they would normally going on buying trips to South Africa and Argentina as well.”
He adds: “We have not done anything like this before, but how we have worked in the past is not going to be the way for the future. We need to stay ahead and stay relevant. So this is a chance for buyers to come and see what the 2021 vintage is all about.”
There might be good volumes of South African wine in 2021, but producers did not have it all their own way with difficult growing conditions, including some rains at harvest time. It is what Fontannaz calls a “testing vintage, you have to be patient with it”. “The good news is we are back on track in terms of production.
Argentina, he adds, was also late, but again has had a good overall harvest, on the back of some unusual cool weather, and rains.
Finally their thoughts turn to Brexit and whilst they are not having to face the issues of importing wines from Europe, even bringing in wines from the southern hemisphere is proving difficult, says Woodriffe. “Selling wine from UK into Europe is definitely a challenge these days,” he adds.
“It’s costly and time consuming,” adds Fontannaz, even down to sending out samples. “It has made doing business even more challenging.”
Not even hiring Clem Yates is going to crack the Brexit conundrum.