Shared values bring the perfect drop

Two wine bosses turn a friendship into an international wine business

Much has been made of Perfect China's recent investment in South Africa's wine industry, but little has been said of the friendship that took about six years to evolve first into a joint business venture last year and now the Chinese purchase of the 25-hectare Val de Vie vineyard in the Western Cape.

Hein Koegelenberg, CEO of Leopard's Leap Wines, and Woo Swee Lian, Perfect China's president, stress that their business dealings are steeped in respect and trust between their families. They are also both deeply committed to the principles of social responsibility.

Theirs is a story that underlines the importance of relationships when doing business. China, more than any other country, requires a high level of trust and shared values, Koegelenberg says.

They first met when he was developing export opportunities in China, he says.

"When I started Leopard's Leap the aim was to focus on world distribution, so when the bottom dropped out of the US economy it made sense to look east."

Now Leopard's Leap and La Motte, of which Koegelenberg is also CEO, are estimated to account for about 10 percent of South African wine exports to Asia. Part of his strategy to increase market share included an agreement with the Chinese University Alumni Association in Beijing. It boasts a membership of about 30,000 corporate executives, of whom the Koegelenberg family hosted 40 last year.

Meanwhile Perfect (China) Co Ltd of Zhongshan, which had been incorporated in 1994, was focusing on its core business: health food, personal care, household, and beauty and skin care products.

It was some years later, when Woo, a Malaysian Chinese, and his family visited the Koegelenbergs on their vineyard in the Western Cape, that he realized how closely their business principles were aligned. Hein and his wife Hanneli showed them several social responsibility projects developed through their own farm.

The one that interested Woo most was Dennegeur village. Built for farmworkers, the project includes a daycare center run by a nursery school teacher. An after-school center helps older children with their homework and additional schooling. A training center, including a library, offers development opportunities in farming as well as general life skills such as literacy and personal financial management. A clinic with a resident nursing sister serves the community, and modern sport amenities cater for all ages.

Importantly, the workers can acquire legal ownership of their comfortable homes.

Coincidentally, Perfect had helped build 100 schools in poor areas in China. The company's website declares a commitment to three management core values - humanity, conscience and compassion - and for five consecutive years its chairman won China's highest award for charity works.

In 2011 the friends formed a joint venture, Perfect Wines of South Africa. Yangzhou Perfect, a consumer products company and a division of the Perfect China Group, holds 51 percent, and Leopard's Leap holds the balance. The L'Huguenot brand was born and the company says it exported 2.8-million bottles of wine to China in 2011 and 2012, about a quarter of annual South Africa-China wine exports.

Gift giving is important to Chinese consumers, so Koegelenberg and Woo have taken special note of this sector. The global wine market research company, Wine Intelligence, says more than half the country's wine consumption is associated with the Chinese New Year and the Mid-Autumn Festival celebrations, and these two events generate enormous increases in sales. Wine is also often given in government and business circles and is invariably imported and impressively packaged.

Perfect China now distributes the L'Huguenot brand throughout the Far East with a sales team of more than a million agents and 5,000 depots to markets including Malaysia, Singapore, Thailand and Vietnam. The agents usually sell directly into their communities.

Of Perfect China's Val de Vie purchase, Koegelenberg, who is also chairman of Perfect Wines of South Africa, says: "The Chinese wine market is very important to our industry, and this first Chinese investment in the South African wine lands is a clear indication of their interest in our wines. It can lead the way to a bright future for the export of South African wine to the East."

Next month the company will host 700 members of the Chinese sales team on an incentive trip to Cape Town, he says. It is the first of a series of planned annual incentive trips to introduce them to South Africa and equip them to better sell the wine.

Val de Vie's cellar facilities will be expanded as part of the agreement to increase production and maturation capacity. "Producing these volumes of quality wine requires many services, which will create jobs in the wine lands," Koegelenberg says. "We also want to focus on tourism from China to South Africa. Bringing Chinese customers to South Africa and letting them experience our wine beauty will turn them into permanent wine ambassadors."

Woo says: "I think the ability to provide consistent supply at reputable quality is to the advantage of South Africa."

The sale of Val de Vie, for an undisclosed amount, includes the vineyards, old manor house and cellar, and there is talk of significant expansion. This includes converting the historic home into a museum to honor the French Huguenots, who fled to South Africa in the 17th century to escape religious persecution in France and greatly influenced their adopted country's wine industry.

It is a friendship that is paying huge dividends for both men and their countries. Buoyed by record harvests, a weaker rand and poor European crops, they and their fellow South African winemakers can expect an exceptional year.

Already Wines of South Africa, which represents all local wine exporters, reports a 40 percent increase in exports in the first six months of the year compared with the corresponding period last year. Wine Intelligence predicts that about 34 million Chinese could be drinking wine by 2015.

Wine Intelligence says in its 2013 Market Landscape report: "China excites the wine industry for a reason. It's already the fifth-biggest market for wine on the planet, with a compound annual growth rate of around 25 percent. There are 19 million upper middle-class drinkers of imported wine in China, and that middle class is growing. The currency situation is favorable for imports.

"And Chinese drinkers are engaging with wine with an enthusiasm rarely glimpsed in many more mature markets, as urban China, particularly the younger, mobile Internet generation, embraces Western consumer habits."

China Daily

(China Daily Africa Weekly 08/16/2013 page20)