Rock Me Mateus

Portugal’s biggest wine company is founded on the legendary rosé brand, but Salvador Guedes, intends to build up a formidable portfolio, including Gazela Vinho Verde and Sandeman Port, says Charlotte Hey

Think pink. The billboard campaign that has been so prominent across the UK for the last two summers has perhaps done more for the rosé category than any other. But what has it done for the brand behind the advertising? Salvador da Cunha Guedes, CEO, Sogrape, Portugal’s largest wine-based business operation, is certainly the man to ask.

Mateus Rosé has been his family company’s number one still wine brand since very soon after its launch 60 years ago. “My grandfather developed the product and it was very much the right brand for the right time,” says Guedes. “He created a global wine brand before anyone had even thought of such a thing.”

And when you think about it it’s true; not many wine brands have the international spread and presence that Mateus does. It must have been difficult then, to try to tinker with such a winner? “

Not really. It was a matter of business. Before the relaunch we were losing 3% to 4% market share year on year. Since then we have managed to reverse the trend and we are now growing in value and volume by the same amount,” he continues. “Perhaps we left the rebranding a little late but with the current trend in increased rosé consumption I think it was another case of right place, right time.”

A softly spoken, modest character with a glint in his eye and particularly British sense of humour, Guedes is open about why he came into the family business. “I don’t think I had a choice really,” he laughs. “It was quite a natural thing following in my father’s footsteps. He did, however, make sure that I worked my way through different aspects of the business, so that I could get a grasp on the different cultures at each level.”

Guedes is keen, however, to talk less about Mateus and more about the rest of the brands that make up the diverse Sogrape portfolio and his plans for building those brands. Indeed, building those brands and the company are a constant theme for Salvador Guedes. “

Our business has grown in the past 10 years via a coherent strategy to acquire. Now we are trying to grow organically, working to improve what we already have,” he says. “As a family company we can afford to take things as they come to some extent, you don’t have to give too many explanations; you don’t have the pressure to get results as quickly as in a public company. However, you do have the capability to react quickly when it comes to decision making.”

In the past 10 years Sogrape’s turnover has rocketed from around €60 million in 1995 to just over €160m at the end of 2004. Its winemaking and business interests are far reaching, spreading across the still and fortified winemaking sectors in Portugal and Jerez, in Spain, with Sandeman Ports and Sherries, Ferreira Port and Sogrape Vinhos and Finca Flichman in Argentina. It also has distribution interests in the UK, USA and Luxembourg.

 “There really are only two ways to grow a company like ours and we decided to diversify the business. At the time we realised that Mateus Rosé was a mature brand and that we needed to develop new brand opportunities for the company,” explains Guedes. “Acquisition was our chosen route.”

The period of acquisition has included the purchase of the Offley Port brand, and their Argentinian property. The most notable and most recent acquisition was the buy-out of Sandeman Port in 2002. Not surprisingly, Guedes is now leading a period of rationalisation within the company. He comments, “Now we feel the company is at a size where it is time to assess our position and concentrate on building our other brands. As a result we are currently rationalising our whole still winemaking operation.

“Initially we had seven wineries within the company. We looked at the portfolio and decided that we needed to consolidate the operation. We closed two of the wineries pretty quickly and are planning to close another in 2006. Instead of having all of our facilities scattered across various regions around Portugal our eventual aim is to have three principal winemaking operations to take care of all of our production needs,” says Guedes.

Rationalisation of the winemaking operation is a strategic part of the company’s global operational plan to develop key brands in selected markets. Namely Mateus in the UK, the Sandeman Port brand in France and Belgium and Gazela in Portugal.

Gazela, a new Vinho Verde brand proposition, is a project close to Guedes’ heart. “We have really put a lot of effort into developing this brand as a lifestyle brand, which is something of a departure for the Vinho Verde category,” he says, brandishing a brightly coloured screen-printed bottle of the stuff. “It took us two years to develop and now in its first year of a five year project we are seeing very positive results. Last year we saw a 55% increase in sales in Portugal.

 “This wine was developed to push the boundaries in our domestic market, an attempt to sell more Vinho Verde to a much younger segment of the market,” Guedes explains. “During the summer of 2005 we will be launching in the UK with Asda. I think it has the possibility to work well in the UK.” At £4.49, with a shot of CO2, light and crisp with a touch of residual, it’s certainly a crowd pleaser.

For Guedes brand building is definitely the way ahead for his company and he has a realistic handle on what it takes.24 “We are now of a sufficient size to be able to really concentrate on what we consider to be our core brands. And that concentration means investment, big investment. Previously, that is before the acquisition of Sandeman, we were a little exposed, now we are in a comfortable enough position to choose the brands we want to develop, build equity behind those brands while looking for other opportunities.” So further acquisition is not out of the question for the group then?

 “Well, I believe in business you should always be open to opportunity. I mean, in 2001 if you’d have said to the board that the following year we would be acquiring Sandeman there would have been a few surprised looks. The only way to grow in the Port category now is to acquire and it’s not too often that the opportunity to buy an international Port brand comes along. When you think of international Port brands – Dow’s, Warre’s, Noval – they have a lot of prestige but not necessarily the distribution or international spread that Sandeman has. Sandeman has a lot of inherent potential and tremendous brand equity which we believe with the right attention given to it can really be exploited.”

Sogrape, being the largest wine company in Portugal, is at the forefront of the industry in terms of the image it promotes for the country globally. But what does Guedes think of the Portuguese industry as a whole? “I think we have taken the right steps recently but there is still a lot that remains to be done at a viticultural level. If we make the right decisions at this level over the next few years the real potential of Portugal will start to shine through.

“Our problem has been that the Portuguese wine industry has been made up of a lot of small producers and companies, the result of which has been that we have lacked a coherent and cohesive image in many of our export markets – real common drive.”

 He continues, “The G7 group of companies has demonstrated that promotional activities can be done successfully together and that there are significant benefits to be had if we all work together. But it’s not something that we individual companies can be expected to do on our own. Yes, we have an important role to play but we have to show a united front consistently.”

Guedes is adamant in his belief that Portuguese wines have tremendous prospects: “I think that consumers and trade alike are still surprised when they taste Portuguese wine. The quality is seriously undervalued. But there is a chance for our wines to be the next thing on the map. I’ve started to hear positive rumblings about the possibilities for our wines, but as an industry we have to put our efforts into building a tangible image for Portugal, creating more buzz and more hype. One of our national characteristics is our humility, and that’s a drawback when it comes to marketing ourselves – we’re a bit of a shy nation really,” Guedes grins.

Humility is not a bad characteristic to have and Salvador Guedes has certainly inherited some of what he considers a national disadvantage. But that hasn’t held him or his company back, nor will it in the future. “I believe we have an opportunity right now to exploit the potential both for our brands and Portuguese brands as whole. Our strategic aim is for Sogrape to take on a pioneering role in investment and market research analysing, analysing behaviour and trends so that we can continue to build brands that retain the consumer’s interest in our wines. We will continue to invest heavily in constructing strong brand equity for our core products.”

The construction and building analogy seems to be a constant theme for Guedes. What would he have been if had not been involved in the family business? “An architect,” he says, “I love construction.” It might not be bricks and mortar, but he’s definitely set on building a powerful company from Portuguese wine.