China is the ‘promised land’ of future tourism to our country, once the English of Chinese tourists improves, and they start becoming self-drive tourists.  The work that the South African wine industry is doing in general, and at La Motte and Leopard’s Leap specifically,  will have a tourism benefit, as they cannot sell the products without communicating its heritage and values, says Hein Koegelenberg, CEO of both wine companies.

Hein started the companies’ focus on China four years ago, having withdrawn from the USA due to an agency problem in that country.  This freed up time and money to invest in Asia, Hein working with agencies due to the difficulty in communicating the brand message in this region, especially as our country is not yet well-known to the Chinese. Having developed a distribution network for marketing La Motte and Leopard’s Leap wines locally and in Europe, Hein used this ‘intellectual property’, as he calls it, to develop a distribution network in China. Creating a link to the end consumer is important, he said.   James and Michelle Tan, who have previously marketed Rooibos tea and Northern Cape minerals to China, were brought on board to guide Hein in selling into China.  One of the first projects was to set up a selection of wines in golf clubs, one of the places in which Chinese drink wine outside of their homes (they do not drink it at home), leading to a type of vinotheque, which stores each golf club member’s wine collection at the club.  Ernie Els, La Motte, and Leopard’s Leap wines and more were offered as a package of good wine brands to the golf club members.  A substantial target has been set for sales of Leopard’s Leap and La Motte by the Tans.  Agencies were appointed to sell the wines into China, Hong Kong, Indonesia, Vietnam, Singapore, and Laos, the emphasis being on marketing specific brand varieties into specific regions.

Within China, Hein is using three distribution systems for his wines:

*   Aussino Wines China,  the company’s CEO Robert Shen being named by Decanter as the 16th most influential person in the international wine world, and with a network of 120 wine shops.  His company sells 150000 bottles of Leopard’s Leap and La Motte, being the only South African brands stocked, by agreement.

*   A joint venture with Yangzhou Perfect, the second largest direct sales company selling only organic products, and has a turnover of R12 billion.   It has 5000 outlets in the Yangzhou region, and 500000 – 1 million agents buy the products of the company, add an agreed mark-up, and then sell them door to door, much like Tupperware sells its products.   Given the tax of 50 % of wine imported into China, efforts are underway with Wesgro, WOSA (WInes of South Africa) and the Department of Trade and Industry to get the tax reduced (New Zealand only pays 30%), the saving in tax being earmarked for the marketing of South Africa in China. Perfect created a wine brand to test sales via its distribution network, and sells 1,5 million bottles. In marketing wines in China, Hein emphasised that Biodiversity is an important foundation, in that it reflects family values and heritage, as well as caring for the environment and for people.  Selling product only leads to it being price-based, which does not create loyalty.  Chinese wine drinkers are trusting imported brands increasingly, having been exposed to fake Chinese wines.  Hein said that 25 % of all Chinese wine sales are of imported wines. Imported wines are predominantly from France (35), from Chile (8%), Australia (8%), with South Africa at 3%.  Half of the South African sales to China are for Hein’s brands.  Wine imports to China are expected to double to 50% of total wine sales in the next five years.  China is the sixth largest wine producing country in the world, ahead of South Africa at eighth position.

Hein has formed Perfect Wines of South Africa, 51% owned by Yangzhou Perfect and 49 % by Leopard’s Leap. For this new venture they have created a new wine brand called L’Huguenot, with more sugar (5% compared to 4 % locally), and choosing wines that pair well with the more spicy Chinese food, being a 50%/50% Shiraz/Pinotage blend, a Chenin Blanc, and a La Motte-style Shiraz.  This new L’Huguenot brand sold 400000 bottles in the first ten days of its launch in China, about 30% of its initial sales target, which will grow to 2,5 million bottles.  The marketing of L’Huguenot, a brand name chosen specifically to link the brand to Franschhoek and its heritage, will also focus on the marketing of Franschhoek, and the Franschhoek Wine Valley association is working on how to do this in Chinese, probably starting off with a Chinese website page, as WOSA will be doing shortly.  Hein’s next challenge is to create a visible consumer interface for L’Huguenot, as he has just completed for Leopard’s Leap. His challenge is what to ‘pair’ with this new wine brand.

*   Hein has also created his own direct sales channel via a company he created, called Prestige Wines. He seeks corporate networks to link in to. The first network is with the Tsinghua University of Beijing, the largest business university of the city, with 3000 CEO members in its alumni club.  An agreement will bring four groups of 50 alumni each to Franschhoek a year, to grow to four groups of 100 over time, giving these influential alumni the opportunity to experience Franschhoek.  A group visited Franschhoek ten days ago, and they played golf, ate at Pierneef à La Motte, and were addressed by former President FW de Klerk, who pleaded to the businesspersons to bring investments to South Africa.  Hein told me at the Leopard’s Leap launch last Friday that they had signed up R1,5 million in wine sales from this lunch alone. They were shown the L’Ormarins Motor Museum, and had a hands-on experience with the harvesting of the vines and tasting of the wines.  A Golf Day which Hein had organised raised R1 million for the alumni bursary fund. Another project Hein is working on is providing a bottle of wine with every Mercedes Benz sold in China, this being the best selling car brand in the country.  A good working relationship has been developed with the 5-star Shangri-La hotel group, and a brand co-operation agreement will no doubt be put in place with them too.  Chef Chris Erasmus of Pierneef à La Motte is to travel to Hong Kong, Malaysia, and Singapore later this year, Hein told me.

Leopard’s Leap sells its wines in 41 countries, with 20 % each sold locally, in the UK, and in Belgium/Holland. Sales to China are at 9%, and Hein is excited about the potential to double this.  The brand was started as a second label, taking up the left-over grapes of the three Rupert Franschhoek wine farms L’Omarins, Rupert & Rothschild, and La Motte, represented by the three leopards on the label.  The brand was created 12 years ago, and was initially only bottled and sold in the UK, with the assistance of Simon Halliday. Local sales started five years ago.

Hein believes in focus and excellence, and China will be his focus for this year, he said.  There are no new projects this year, with his focus on detail to achieve the goals. While Hein says that he has not had the time to learn Mandarin, he does have Chinese characters for his name and title on his business card.  He told me that his Chinese name is Gu Hai Ning, the last name meaning ‘calm ocean’, a description that he was given to describe his face.  Hein is the first to admit that the work and success is not his alone, and he praised his team of Wanda Vlok handling Marketing, Marius Kotze handling Sales, Leopard’s Leap winemaker Eugene van Zyl, and Kareen Neethling handling Logistics and Planning.  Grapes for the production of Leopard’s Leap wines are mainly sourced from Wellington, Ashton, and Perdeberg.

With the focus of La Motte, L’Huguenot, and Leopard’s Leap on the Chinese market, Franschhoek tourism players will need to start learning Mandarin, given the marketing benefit that the village is likely to experience in future.

Chris von Ulmenstein, Whale Cottage Portfolio: Twitter: @WhaleCottage