VISIONARY thinking – the steady approach applied by United Wineries

The steady approach applied by United Wineries’ Victor Redondo Sierra has paid dividends with a distinctive lifestyle brand, writes Patrick Schmitt.

Almost ten years ago, the president of United Wineries, Victor Redondo Sierra, spoke of an impressive plan for the Spanish group over lunch with the drinks business. Before the meeting, it was expected that he would discuss growing the group’s flagship label, and Spain’s best-selling brand, Berberana, but it quickly emerged that his mind was on something greater and bolder.

In fact, Victor, a former investment banker, was proposing a complete reposition of the company, involving moving United Wineries’ HQ from Spain to London, creating entirely new wines – some from unknown regions – and opening boutique hotels in London and Spain, as well as wine shops and restaurants. It was hard not to be impressed, but also, it must be admitted, a little sceptical.

However, today it is clear Victor’s plan was not remotely far-fetched. Indeed, his vision has been realised. Or perhaps one should say formalised, because his ideas have now been organised under one umbrella lifestyle brand, using the name Zorita.

The word comes from the group’s first hotel, Hacienda Zorita, which was opened in 2001 as part of United Wineries’ Haciendas de Espana project, although the building it occupies – situated just outside Salamanca – was built several centuries ealier, and documentary evidence shows it was occupied by Dominican monks in the 14th century.

Speaking to Victor in mid-March this year, he says that the United Wineries Group, which is owned by CFA (Corporacion Financiera Arco), has just invested a further €2m in the hotel to create a series of mini-villas, add a wine spa and a new dining concept called Zorita’s Kitchen. The work was finished by the end of February, and Victor describes the reconfigured hotel as “the mothership”.

Why? Because Hacienda Zorita has given Victor the impetus to expand the group’s hotel, hospitality and restaurant business, and, as noted above, the inspiration for a single lifestyle brand encompassing a range of Spanish operations, particularly based around the Duero Valley, be they hotels, restaurants, foods or wines.

And Victor believes the success of the original Hacienda Zorita stems from its gradual, thoughtful development – the antithesis to what he sees as the current and unfortunate trend for quick solutions.

“If you think what has happened in the world during the past five years, I believe we are victims of doing things too fast, but Hacienda Zorita is where it is because we didn’t go too fast, we thought it through,” he says. He supports this assertion with news that this single hotel made a €500,000 profit last year, due to a slow but sustained rise in visitors and room rates.

Now Hacienda Zorita is one of a handful of wine tourism businesses in Spain’s Duero Valley area owned by the group. One of these is “Hideaways by Hacienda Zorita”, a new concept which has been applied to the group’s Hacienda Zorita Natural Reserve in the newly formed DO Arribes del Duero wine region, where United Wineries produce the Durius Hacienda Zorita Tempranillo.

“We converted the 10-room hotel into a hideaway with two 5-room private villas with a swimming pool and private butler,” explains Victor. “And you can have private experiences such as a hot-air balloon ride over the Duero Canyon or a tasting menu with Michelin-starred food, all surrounded by vineyards.”

In the meantime, in June, Victor is opening a further “hideaway” next door to Vega Sicilia, where the company also has vineyards. Also due to be unveiled in June is the “third pillar” of the Haciendas de Espana operation, called the Hacienda Zorita Albergo Diffuso, the first one in Spain. This is inspired by Italy’s redevelopment of half abandoned ancient towns using empty buildings as guest rooms, and Victor has taken on the Villa  de Ledesma village not far from Salamanca, and just 20km from the original Hacienda Zorita.

“It used to be one of the top 10 historic towns of Spain but it was neglected,” says Victor, and he has gradually bought the buildings from different owners and was the impetus behind the restoration of the village, including the pavements, lighting and facades, using a €3.7m grant from the government and €12m raised by CFA.

RESTAURANT BRAND

Then there’s Victor’s restaurant brand to consider. This is called Zorita’s Kitchen, a concept found in the newly refurbished Hacienda Zorita but also now in the UK, where it can be experienced under United Wineries impressive central London headquarters overlooking the Thames  (Victor, as planned, moved the company’s main office from Spain, first to a small site in Victoria in 1999 and then to its current larger Blackfriars base in 2006).

The outlet serves and sells high-quality Spanish food, olive oil and wine in a simple setting, and, according to Victor, has attracted over 15,000 diners in the past six months. It was previously a tasting room and wine shop, but Victor opted for this informal dining concept having witnessed the success of Italian producers Antinori and Frescobaldi with their eateries in major cities.

“I knew what Spanish people wanted and I didn’t know what the English wanted, but now I have the right idea, I’m looking at two further venues in London for this year and I hope to have 30 across Europe and the UK within the next five years.”

Continuing he says, “The concept is very simple: you like our wines, our organic food, our cheese, our iberico ham and our olive oil and you can do three things. You can go to a supermarket and find them, or come to Spain and be my guest – Spain is the second most visited country in the world [after France]. Or, referring to Zorita’s Kitchen, he adds, “sometimes the mountain comes to Mohammed, and we bring them to your doorstep.” Hence, he concludes on the concept, “We are taking a chunk of Hacienda Zorita into the major cities of Europe.”

Summing up his development of the hotel and restaurant side of the business, he continues, “This is not an ego trip, or about passing something on to the next generation, my plan is to do something impressive for the shareholders, and because I work long hours, I also want to have some fun.”

It is also about creating, as noted above, what Victor describes as “the first lifestyle brand from Spain.” This he hopes to have achieved by 2015, and, as part of this, will be launching a range of estate wines from the Duero Valley, such as the limited production Magister, under the Hacienda Zorita name. He’s also considering adding a wine, or possibly hotel too, from the Douro, and, he says, would like the Duero/Douro to become the Napa Valley of Europe.

And Victor assures the whole project is unfolding as planned. “It will happened exactly as and when we have programmed – we are on course, and 85% of the investment has been made.”

However, speaking of Spain as a whole, he vents his frustrations. “You either have the best or the worst,” he says. “You’ve got Ferran Adrià, the best chef in the world, and you’ve got Benidorm, where you can’t get anything decent.”

Then turning his attention to the wine business he laments, “Spain has to do something other than selling bulk wines: 70% of its production is sold in bulk to its competitors, such as Italy, at an average price per litre below €1.”

Victor’s solution is, he says, “to show the way Spain should be, and I believe somebody has to do the same thing in wine Ferran Adrià did for food.”

Nevertheless, Victor is rightly indebted to United Wineries’s longstanding success at the volume end of the wine trade. “The conventional wine business for us is the cash cow and I am very grateful for that, because it generated the money we needed to do this,” he says, referring to the hotels and eateries. It has also allowed Victor to reposition United Wineries’ entry-level wine operations too.

“We stopped growing in volume in 2007 and it was one of the best decisions we’ve made,” he says, adding, “We are now a lean organisation with big well-known brands.”

BUSINESS MODEL

Describing his business model, Victor comments, “I looked at the wine industry and if you take a chart showing profit versus volume it should be U-shaped, but in fact, it’s an inverted U. This means, unlike other industries, the bigger you get in wine the worse it is for shareholders, but if you are too small, you only have a way of living that pays for expenses, not a real business.

So, like in politics, it’s best to be in the centre. You need enough volume to be a brand in different markets, but if you are too big, you compromise everything. So we have established two limits – and we will never be above or below them.”

And Victor’s whole aim for the once volume-driven United Wineries business, built on the Berberana brand, is to use tangible assets to create a high value and distinctly Spanish brand in Hacienda Zorita. This is partly to tap into a fraction of the near 60 million tourists who visit Spain every year, but also to ensure the group is attracting the top-end consumer, and not trapped into the shrinking commodity wine market.

As Victor states, “The wine industry is not growing, there is consolidation. And people are stopping drinking during the week. Wine is no longer part of the daily diet, it is a leisure activity, a luxury.”

This, for Victor, is “good”, because, as he concludes, it encourages the trade “to extract the quality potential in wine”. And thankfully, as the industry is well aware, there’s plenty of that.