Fresh strategy alters wine firm's fortunes

By Joe Helm

A three-part strategy of improved marketing, new joint ventures and a merger has brought about a dramatic reversal in the fortunes of De Redcliffe Winery.

Less than 18 months ago the winery, in the Mangatawhiri Valley south of Auckland, had a very bleak future. It was not profitable and had a stock to sales ratio of four to one.

Now the company is profitable, has a stock to sales ratio of two to one, has increased sales from 14,000 cases to 24,000 cases and has increased exports from 7 per cent to 30 per cent of sales.

General manager Christiaan Palsenbarg said the turnaround began in 1997 when the businesses of Hotel Du Vin and De Redcliffe winery were merged.

The hotel and winery have the same Japanese owner but were run as separate businesses despite the 46-room hotel being in the middle of the De Redcliffe vineyard.

"We were failing to capitalise on our unique position," said Mr Palsenbarg.

"Now, with a combined sales and marketing team we can share resources and take advantage of joint marketing opportunities."

The hotel has a strong corporate activity base during the week, but operates more as a resort during weekends when Aucklanders use it to get away from the city.

A strong non-residential market also uses the hotel as a restaurant, especially for weekend lunches.

The second significant factor in the company's turnaround is an increased emphasis on marketing De Redcliffe wines.

That has involved a rationalisation of product lines from 20 in the 1997 vintage to six, and the development of new export markets.

Marketing manager Eric Wegman said: "It has been a watershed year for De Redcliffe wines. We have increased sales by over 70 per cent and developed new export markets, particularly Belgium and Japan."

Domestic distribution channels have also been rationalised. The company now uses existing wholesalers rather than supplying smaller clients directly.

A big part of the domestic expansion has been joint ventures. De Redcliffe has established these with vineyards in Marlborough and Hawkes Bay, enabling it to share knowledge and reduce costs.

It also means De Redcliffe can produce wines representative of all New Zealand's major wine-growing areas.

Mr Wegman said De Redcliffe would consolidate its position as a successful medium-sized winery over the next year but would continue to seek growth opportunities.

The first De Redcliffe vines were planted in 1976 by Chris Canning.

The company listed on the stock exchange in 1986 but was taken over by former Auckland Hyatt Hotel owner Michio Otaka for $10.7 million, and delisted.