MARKETING BRANDBUILDER – Pastures New
Following difficult times in its domestic market, where the wine glut has taken its toll, McGuigan Simeon is focusing on its branded portfolio and international exports in order to boost earnings. Fionnuala Synnott reports
Already a big player in its native Australia, where it is the second largest wine producer, McGuigan Simeon Wines is determined to boost its UK market share, and has made some big changes to its on-trade strategy in a bid to replicate the success it has had in the off-trade.
Towards the end of last year, the company announced that it had chosen WaverleyTBS as its on-trade representative in the UK, putting an end to its 14-year arrangement with Vinoceros. Although Vinoceros succeeded in building the McGuigan Black Label brand to over 300,000 nine-litre cases in the UK, its sales had plateaued in recent times. “Our product was well-received, the problem was distribution. Vinoceros was fantastic regionally but it didn’t have access to the national on-trade routes or major cities,” explains Paul Schaafsma, regional director, UK & Europe.
As part of the five-year deal, WaverleyTBS will look after all of the producer’s distribution in the on-trade as well as a number of multiple off-trade accounts. Schaafsma has high hopes for the new partnership: “It’s a good marriage: they wanted to have their own off-trade brand and we wanted someone with a good footprint across the country.” The plan is to grow McGuigan Simeon’s on-trade listings by 100%. “One listing through WaverleyTBS could double our on-trade business,” says Schaafsma.
WaverleyTBS has access to 36,000 accounts and 21 distribution hubs in the UK. “The deal gives us the clout and flexibility of working with everyone from the small independents to the large national accounts. You can spend a fortune on marketing but to have that kind of distribution is fantastic,” he adds.
As part of the deal, Waverley will distribute the McGuigan Black Label range – Australia’s third top-selling brand – exclusively to independent UK outlets. Schaafsma expects to see the brand grow by 50% in the first year of the deal. McGuigan Simeon has also come up with a new range exclusive to WaverleyTBS – the McGuigan Collection – which will be positioned in gastropubs and includes a Pinot Grigio, Chardonnay, Shiraz/Viognier, Shiraz and sparkling rosé. McGuigan Simeon will also benefit from WaverleyTBS’s strategic alliance with Threshers, which will list nine of the Australian producer’s products. In McGuigan Simeon’s case there are many products to choose from. The company’s portfolio encompasses everything from bulk wine (the company makes own-label wine for Tesco, Sainsbury’s, Somerfield and Co-op) to boutique brands such as Tempus Two Pewter, pictured above. (The new Tempus Two Moscato will be listed in Tesco and Thresher shops from August this year.)
McGuigan Simeon’s current strategy is to grow its international business as well as its branded sales, following reports of a 3% drop in domestic sales earlier this year. The company has suffered as result of excess production and had to write off almost A$30m in stocks last year amid a glut of red wine. As a result, McGuigan Simeon saw its operating profit slump by 62% year-on-year to A$4.9m for the six months ended 31 December 2006.
When it comes to building its branded portfolio, the UK market has the most potential – the company increased exports to the UK by 69% last year. “We’re trying to give the multiples a complete package,” says Schaafsma.
McGuigan Simeon is also focusing on premium brands, such as its Hand Made Langhorne Creek Shiraz 2005 to boost its earnings. With an rpp of £25, this is a limited edition wine (only 500 dozen cases have been produced) with cellaring potential made personally by the company’s MD Brian McGuigan. But, despite all of the premium ranges in its arsenal, it became apparent that the company couldn’t only grow its premium offering organically. McGuigan Simeon looked to make external acquisitions and bought the Nepenthe Group, a producer from the Adelaide Hills, for A$25m in February this year. Schaafsma explains: “We wanted to add a quality, aspirational wine to our portfolio. Nepenthe Wines ticked all the right boxes. The winery has won several awards for best Sauvignon Blanc – only a few producers can do this. We knew that the owner was looking to partner with someone. An important part of the deal was that he remained the gatekeeper for quality and the face of the brand. His brief is to produce the best Sauvignon Blanc in Australia. We intend to be the champion of the Adelaide Hills.”
© db May 2007