Kompetitive Wine Values

With his business management background, Johan Bestbier is bringing a fresh perspective to KWV. He’s already instilled a winning team spirit and two new brands are imminent from the company still seen as synonymous with South African wines and spirits, says Robyn Lewis

Despite the raunchy black leather finale to Greece poor Olivia Newton John never quite managed to shake off the girl next door image did she? Kylie Minogue, on the other hand, managed a swan-like transformation from bubble-permed girl next door to international sex symbol but it certainly wasn’t an overnight metamorphosis and (despite the teenytiny gold hot pants) there’s a bit in all of us that still recalls the dungarees and Donovan days. The question is if it is just as difficult to facilitate an image change in the drinks industry today? Because there are certainly some companies in need of a revamp and KWV, the South African wine and spirits producer, is one of them.

With a somewhat chequered history – apartheid aside, there was the recent Sauvignon Blanc scandal to contend with, where winemakers were caught putting prohibited additives in the wine – the company has a big job on its hands to be seen as a modern, forward thinking, dynamic company, in other words a contender on the international scene. KWV’s new managing director, Johan Bestbier, knows this perhaps better than anyone else.

“Is KWV progressive? Do people view it as dynamic and action oriented and so on? I think there is a lot of room for improvement,” he confides. “It is certainly one of my objectives to try and improve on that. Continuously trying to re-invent ourselves, streamlining it, improving it. On the upside I think KWV is known inside South Africa as a South African icon and it is also one of the leading South African companies internationally, without any doubt, but there is definitely work to be done.”

“Such as?” I have to ask.

 “Well, competitiveness is one of the big things. We need to concentrate on that and at the moment we are working on a number of things to improve this. Our competitive base, that is where we can grow from, is at the moment, I would say, not optimal. I mean in a sense, in the commercial arena, it was really only a couple of years ago that we transformed from a co-operative into a commercial organisation and so I would say we are still a young company.”

KWV is in fact a group of companies, of which KWV Ltd is the holding company which owns two subsidiary companies – KWV South Africa which deals with the production side and the trading company, KWV International Ltd, which is the part Bestbier heads up.

Regional focus

 “This section is also split up into overseas subsidiary companies,” he explains. “In the UK there is Edward Cavendish & Sons, which we 100% own; in Germany it is Eggers & Franke, in which we are a 75% shareholder and in the US we have an 80% share in the 57 Main Street Co. We have also organised the KWV International arm into the three groups, the first is the UK, USA, Canada, the Far East and some opportunistic business, which is looked after by Pete Momberg Then there’s Europe, including Germany and the Scandinavian countries, which is run by Brian Anderson, and then the other sector looks at Africa, South Africa and the Middle East and global marketing is in that division as well. What I like about this structure is it gives us fantastic focus on regions and each of the business executives there is fully accountable for their regions. But also they are on the executive team and, with me, are taking the company forward, driving our strategy and business. So I talk about the dual role of our business executives. Yes, this does help keep us close to our markets but also it is about getting the people in the company working as a team with one focused goal or vision. I would say that when I joined there was a bit of a regional focus in mind, people only looking at their own patch, really. What I’m trying to do is to say to the guys, ‘You can still focus on your area because that is what you are accountable for within the business but you also take hands with the rest of the team and with all the people on your level and with me and we make a success of the company and not just of your region.’ I think that teamwork, formulating common goals and facing joint responsibility was one of the main objectives and challenges and I think we’ve done well with that. The team that is in place now understands that.”

Damage limitation

It has to be asked if this new focus on teamwork and accountability has come about out of the Sauvignon Blanc scandal last year but this is something Bestbier is keen to deny. “The new focus had nothing to do with that incident, they (by which he means KWV South Africa, the production arm) reacted to that immediately and brought in the new wine mentoring team as a direct result. What happened was wrong and against the law and there’s no two ways about that but if we now look back at all the actions and all the responses and so on I think there is a lot of appreciation for our openness and our decisiveness and the professional way in which we handled it. If anything I think that while the incident is regrettable and wrong, the way we handled it actually had a positive spin-off for us.”

Of course, as well as modernising the image of KWV Bestbier also has to deliver some hard and fast results, improving the sales figures and profit margin of the company. To this end he says he is looking at growth opportunities in the US over the next year or two where, “We have been for about 10 years already but the growth up to now and the recognition of the category has not been that well established. Now, though, if you read all the press and listen to the industry talk, it seems there is a feeling that it is going to happen over there for South Africa in the next two years. After that we are looking at China, obviously, Japan and Eastern Europe.”

Wine challenge

Bestbier has only just arrived in the wine industry, from a technology, chemical and engineering company with a background in project and general management and his biggest personal challenge at the moment, he says, is getting to know the wine industry. This relative inexperience of what can be a very unique and particular industry makes his views on the business all the more interesting. For example, when talking about KWV’s biggest market the UK, he voices some surprise and concern over the discount mania that presides. “The UK is an unbelievably difficult market and one doesn’t know where this is going to end up. It’s a downward spiral with the huge promotions that go on. For example, I read somewhere that 80% of wine sold in the UK is on promotion and as someone from outside the industry I find myself asking how this is going to end? I don’t know. Sustaining quality and so on will become a problem, as people are just not making money on selling wine in such a climate. How the hell can you make a good product, of a good standard, with decent availability, etc in the longer term? We are finding the UK an extremely difficult market, as through Edward Cavendish we are concentrated mainly in the off-trade. We have just started to move into the top tier however and are beginning to push our finer wines, obviously with a lot of exclusives for the ontrade and that sort of thing, but at the bottom end we are in the jungle and we are feeling it The other big markets for KWV are the Scandinavian areas, which Bestbier feels offer a more positive outlook. “We see the Nordic countries as definitely one of the more exciting growth areas for us and we are focusing there quite a lot. I believe we are growing there about 20% per year. It’s the same in the US. In fact in total, KWV, on a sales basis, is growing about 20% year on year, which we are very excited about. Up to now we have had a volumedriven goal but we are not looking as much to that now. More we are looking at growth profit tactics, planning to grow between 10% and 20% per annum. I think we can definitely achieve that.”

New products, new brands

But growth cannot come from an (ever decreasing) pool of new markets alone, a fact that Bestbier is more than aware of. As a result he has placed a lot of emphasis on brand development and NPD within the new company structure. “Definitely the wine industry is behind in branding terms and apart from all the other things I’ve mentioned today, the key success factor for KWV today and for the next year or two is much more efficient marketing, including NPD and innovation. We’ve been caught napping and we fell behind. Our big international focus is now to get that right and towards the end of this year the results of this should become visible. We’ve got some great plans already. 

“NPD is notoriously risky and expensive but we are committed to creating new and exciting opportunities for us. We have two new brands, which will be rolled out over the next few months. We have also developed a new corporate logo and we also have a big brandy project in mind for South Africa, where we are the brandy company. We have done very well with our brandies and have won numerous awards but we have a vision to make it even bigger and better, so that’s exciting. We are looking at two of the brandy brands and we want to give them a new modern feel that will be the base of the KWV range. And further into the future I think the spirits range might grow, I mean we have the capability for gin and vodka but we just haven’t built the brands there. So that might be the drive for a merger or acquisition, or joint venture even. I can’t say very much more but we certainly want to expand our product mix and we will be looking at partners. All this means that in a few months time, with this strategy and the new focus of following a master brand, I hope the world will sit up, take notice and see we are a new KWV.”

It looks like it’s about the right time to bring those gold hot pants out of the wardrobe, boys and girls.

JOHAN BESTBIER’S CV

Born: July 18, 1958, in Cape Town
Education: A triple graduate of the University of Stellenbosch, where he obtained a mechanical engineering degree, an honours degree in business management and administration and an MBA cum laude Employment history: Was previously general manager of Somchem, a technology engineering and chemicals company
Family: Married to Jeanne with two daughters
Interests: Golf and cycling

KEY KWV FACTS
• Est. 1918 as a private wine farmers’ co-operative to stabilise the wine industry in South Africa
• Started making brandy in 1930s
• Converted to a commercial company in December 1997
• Shares permitted to be freely traded in 2002
• Today the company has three business units: KWV Limited; KWV SA (production and procurement company); and KWV International (trading and marketing company in 35 global markets, of which the UK, Germany, the US and South Africa are the core)
• KWV International: est. 1995 as the global marketing and trading company of the KWV group • Operative in more than 35 markets.
• Brands include: Perold (icon wine); KWV Cathedral Cellar; KWV Roodeberg; KWV Classic; Robert’s Rock and Pearly Bay. Brandies: 3, 5, 10 & 20 Year Old and Imoya VSOP Alambic Brandy.