4 September 2009

South Africa: Ignorance Made Liqueur's Creators Think Big

Johannesburg — COMPETITION in international markets is tough, particularly for liquor products. To survive without oodles of cash requires chutzpah, perseverance and no small amount of good luck.

Wild Africa Cream Liqueur has had all these things, but perhaps more importantly, it is a solid product that has found a durable market.

When marketing director Russel Gillwald and his business partner decided to launch a new liqueur for export in 2002, their blissful ignorance of the obstacles in store allowed them to think ambitiously. "If we knew then what we know now we might not have done it at all. We built our brand on a shoestring," he says.

Big liquor multinationals have pumped millions of dollars into attempts to build a rival to Bailey's Irish Cream , only to retreat after the initial, costly launch.

But in the six years since its launch, Wild Africa Cream Liqueur has -- without the backing of a large multibrand -- managed to generate annual turnover of about R40m, with 85%-90% of this derived from offshore sales in 42 countries.

But now Gillwald says a capital injection by an equity partner is vital if Wild Africa Cream is to get access to big new markets. The search is on to find the right investor who could bring capital and hopefully a strong, established distribution network.

The liqueur is mainly sold in continental European countries but the US, UK, Brazil, Australia and Mexico have been flagged as the next challenge.

The story of the company goes back to 2002 when entrepreneur Gillwald and his partner decided to create the new liqueur with a sugar cane alcohol base. With no experience of the liquor industry -- but plenty in marketing -- Gillwald researched the trends and opportunities available and "realised quite soon that it was going to take a brand with a unique character if it was to survive".

"It was discouraging to realise what the big multibrand operators were spending on their brands, knowing that this would be a one-brand venture with very limited resources," Gillwald said from his home in the south of France.

"The brand had to be fresh, avant-garde, fun and pedigreed enough to get people to try it, definitely unique and no copycat, and the liqueur had to be so good that they came back for more."

After months of blind tastings and test marketing several brand options, he was satisfied with the quality and extended shelf life of what became Wild Africa Cream.

It differed from other cream liqueurs in that it had a lighter, less-cloying texture. Its bottle was given a luxurious leopard skin cover and African bead-work around the neck to give it a distinctive flair.

A European liqueur producer helped with construction of a state-of-the-art factory in Somerset West in the Western Cape; an American investor, Steve Perkins, bought a stake and became MD; and Wild Africa Cream Liqueur was launched in SA in July 2003.

The product was always intended for export and Gillwald embarked on foreign travel to market it. The first exports were to Sweden, after which distribution spread to other parts of Scandinavia and then Europe.

"We did not have the financial resources to take on large markets like the US and the UK," Gillwald recalls. "We cherry-picked smaller ones that we could focus on and make work and use as a springboard to bigger ones.

"We had to grow the business according to our means and whenever we became profitable we would use the surplus for the marketing and advertising costs of entering new markets."

Volumes have grown at an average of 30% a year, and the liqueur is now available in 44 countries. State-by-state launches in the US have been planned for this year, Australia will launch towards the end of the year, and Gillwald is actively looking for distributors in Brazil and Mexico.

Growth in demand was such that last year plant capacity was expanded from 1-million litres to 3-million litres.

The most significant recent launch was in Germany, where Wild Africa sold more than 220000 bottles last year , its first year in the market. Previously, though, German duty free partner Heinemann listed the product in April 2004 and now moves more than 100000 litre bottles a year, about 10% of total output.

Sales in the UK are expected to grow after a slow start now that a deal has been signed with a new distributor.

As any exporter knows, the biggest obstacle is getting the product on to the shelves. Listing fees charged by the large chains in Germany, for example, are very expensive but as Gillwald observes, the scale of their operations -- some have more than 3000 supermarkets -- means that once the listing has been clinched, distribution happens quickly and extensively.

Liquor board listings in Canada have also been extremely hard to get, but once obtained, the product had a forced distribution. In Sweden, liquor advertising is illegal but there is also forced distribution by the government- owned liquor monopoly, which creates an equal platform.

In the UK, the major obstacle is winning the confidence of the individual product managers of large supermarket chains, who have the power to list or not.

The rewards have not been long in coming. In 2004, Wild Africa Cream Liqueur won gold in the French Sial d'Or competition in its product category. In 2005, it won gold in the German Mundus Vini awards, and last year it won gold in the packaging category of The Drinks Business Liqueur Masters competition.

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