INTERVIEW: Still or sparkling?

Xavier Pages took the reins at Codorníu three years ago and has firmly made his mark without infringing on the family company’s premium ethos. Charlotte Hey discovers his ambition to expand the brand’s still wine beyond cava

It is nearly three years since Xavier Pages took up his position as CEO of the Catalunian cava giant Codorníu and when he joined in 2005 he had the privilege of being the first man to take the position who was not a family member. This of course has its challenges, but Pages, an affable, yet unassuming man, appears to have a quiet determination and a seriousness that must have proved invaluable in the short time that he has been in charge.

Being at the head of a family company “certainly gives it a strong identity,” Pages acknowledges, “but with such a long-standing family reputation – 473 years, in fact – the consumer gets a sense of our dedication to wine production.”

Pages is a professional, admitting to a keen interest in international markets and diverse business cultures, but he is also very much a family man, apologising as he arrives for not having more time to talk as he has to attend his son’s school play later. Perhaps this helps him too in dealing with the family board? He smiles, “Working in a family company gives you the privilege of taking a long-term view” – in his eyes, strictly necessary in a wine-producing business. “Often today people involved in this business believe we are in the FMCG business, but we are not. Yes, it is a consumer-oriented business, but we also have to understand what owning a vineyard means. Short-term returns are relatively rare in this business because being committed to the long term adds to the quality of the product itself. When it comes to quality wine you can’t just turn on a tap.”

Pages admits that since taking the position of CEO at Codorníu SA he has changed many things, “but I have not touched what defines the business, our mission. We still, as a company, represent the same things; primarily we are a wine business producing premium, quality still wines and cava. Our primary ethos remains the same.”

From the start of his tenure, Pages began a total internal review of the workings of the company with the intention of defining a new strategic plan. “The aim was to highlight those aspects of the business that would be key strategies going forward,” Pages reveals, “when the internal review was completed we decided that the two fundamental areas of focus would be how we did business in the market and how we approached the consumer.”

Consequently, a much heavier emphasis has been put on sales and marketing plus a new internal approach as to what is going on in the vineyard. “We have put much more emphasis on marketing. This doesn’t mean more adverts,” he says “it is more about understanding market and consumer needs and a move away from the very European approach to winemaking – of producing what we think we should be producing –  and looking at what the market is actually demanding.” This may sound fundamental in today’s market climate but this is a pretty seismic change for one of Spain’s major family companies, notwithstanding the fact that Codorníu has always been one of Spain’s most innovative companies.

“That being said,” Pages, continues, “we are not talking about fashion, we are talking about understanding needs and changes in market characteristics, both domestically here in Spain and in export. What we want to be able to do going forward is to maximise market opportunities and be in a position as a company to do just that.”

As a result Pages and his board decided to concentrate on distribution and the possible acquisition of distribution outlets where the opportunities arose. Codorníu, under the guidance of Bill Breen as MD, had been operating for a number of years and the success of key cava brands in the UK had demonstrated the consequences of having an operation based in that market. Earlier this year Codorníu purchased a distribution operation in the USA. “It is a big commitment for us,” he admits, “but now is the time to be buying not selling and by having experts based in a market that is strategically so important for wine and will continue to be such we had to have the courage of our own convictions.

“Also you musn’t forget that we have a very important investment in our Napa Valley brands, Codorníu Napa and Atesa. We have our Spanish brands, but we are also competing with our own brands in the Californian category,” he concludes, “add to that our Argentine interests and the growth that Malbec has seen in the States in the last couple of years and this is something that shouldn’t be sniffed at when it comes to building distribution in that market.”

Market strategy
There are plans to devote more efforts to the Scandinavian markets. However, given the market structure there, there are no plans to repeat the UK or US exercise. Other potential markets earmarked for a more focused approach include the Benelux nations, Japan and Switzerland. “We are in touch with emerging markets such as the BRIC countries,” he adds, “but these, while important, are currently secondary markets as far as our strategy is concerned. We want to grow in value and volume in those markets that are already established. As we have proved in the UK it is possible to market and develop our image of a quality wine producer while at the same time make consumers appreciate and perceive the value and quality of a superior cava.”

Arguably, however, Codorníu has been one of the only cava producers consistently delivering this message. “It is a constant challenge for us, in such an important market, to improve the category and its potential in the UK.” Pages refuses to be drawn further on his concerns about the market and switches to the subject to the company’s still wine portfolio, “This is one of the areas where strategically we are very much focusing our efforts. It is both a challenge and an opportunity to leverage our still wine brands into the sector on the back of our sparkling wines – another factor which was highlighted during our internal review process. I have to admit,” he continues, “this was an area where we have to set ourselves apart going forward, we have very good winemakers, but what we were lacking was team spirit. As we scrutinised the winemaking part of the business we realised that the sharing of winemaking practices or of innovations was not really happening across the different winemaking arms. In fact, we did not have a common approach to winemaking. We have begun to recognise that every wine we produce has to have the consistency and quality of the Codorníu brand, but it also has to carry its own personality from the terroir of the region where it is produced.”

United approach
With better internal communication in mind for the first time the company created the post of group winemaker. “A major departure for us,” says Pages, “now viticulture and vinification are very much more connected. The group winemaker is involved in the executive committee and reports directly to me. The key has been to improve the communication of ideas between our 10 wineries – from Napa to Cataluña, Rioja to Argentina.” Pages adds: “The emphasis has been put on the importance of our winemaking practices, producing the best wines possible from the best vineyards and blocks within those vineyards.

“By including the winemaking arm of the business in the executive they are involved from the outset in marketing and sales decisions, they are included in the process and vice versa the sales and marketing teams also begin to understand the challenges and exigencies of winemaking; in that way we maximise the opportunities available to us.”

The discussion returns to cava as Pages admits that his vision for the company is to make the share of still wine in the business more than that of cava, which currently represents 65% of the total business in terms of value. “That does not mean that cava is not going to grow in the future but we see that the potential for still wines is far greater when you consider international demand, our strategic market focus and the synergies with other businesses that are developing.”

But what of cava now? Hasn’t the category priced itself out of the market negatively in places like the UK? Pages believes that quality is the only way forward when it comes to cava, “it doesn’t mean that we don’t have good quality cava now, what we have to do as a category is continuously strive to do better.”

Better quality, however, surely will have an impact on price? “We have, of course, to be very aware of pricing,” he acknowledges, “as a brand you have to build a consumer base, learn how to educate and promote to the consumer in such a way that they understand that better quality means a higher price. It’s not easy but if you are in this for the long term then devaluing your product is not an option.” Perhaps Codorníu is one of the few big cava brands who have been capable of demonstrating that in recent years.

As he leaves to catch the start of his son’s play Pages turns and laughs, “I’ll be in trouble if I don’t get there in time but just one last thing, the challenges that we face as a company right now are to execute everything we do to the best of our ability, to be more ambitious, be better at what we do, better marketing, better wine, better quality and build for growth. We might be facing tougher times ahead but I believe we are up to the fight.” With that, he apologises once more for not having more time and leaves.

db © September 2008