Allister Kreft – taking wine across Africa
25 September 2015
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Brad Brown: Welcome to this edition of Old Mutual Live, great things start here, great things start now and we are joined by Allister Kreft on today’s podcast. We’ll get into a little bit about what Allister does and his background in just a moment, but before we do that, Allister, welcome onto the podcast, nice to catch up.
Allister Kreft: Brad, thanks very much for having me, it’s great to chat to you this morning.
BB: I love the fact that I get to chat wine for a living, you basically work in the industry as well. You do various things and we’ll chat about that just in a moment, but we’re basically fresh off Cape Wine 2015 and you were there as a visitor this time around. We’ve been speaking about it quite a bit in the build up, to a couple of the major role players and we’ve spoken to a couple of the estates that were hosting visitors. Tell me all about your experience with Cape Wine 2015?
Cape Wine 2015 was incredibly well done
AK: I think, first of all, it was an incredibly well organised event. A lot of these industry platforms, you sometimes get the role players, like a wine estate or a trade show, a visitor, sort of really relying on the platform and trying to push the platform to deliver business to them.
But what was amazing, for me, was just to see the innovation and energy coming from the producers. All the way from the really big guys to the micro producers who are dressing up in superhero outfits and promoting their wines. I think it was a great balance of a well delivered show, but also incredible energy and creativity from the producers themselves.
BB: We’ve spoken about it at length over the last month or two, just with regards to what it’s all about and it’s just such a great idea, it’s a great initiative and I think a lot of other industries outside of the wine industry in South Africa could really learn about what the wine industry is doing. How everyone is working together for the betterment of the entire industry.
AK: Absolutely and it’s an incredibly challenging space, it’s a very competitive global market. But what’s incredible now, when you travel to places like the UK and in America, you just start to see how much more shelf space South African wines are taking and that’s actually the point.
When you’ve got two or three farms next door to each other in Stellenbosch, they’re not competing against each other, they’re competing against the guys in Australia, New Zealand and America and I think that’s really hit home and people are willing to collaborate and drive the industry together.
BB: Without a doubt. Allister, tell me a little bit about what your involvement was? You said you were there as a visitor, but you do work in the industry, tell me a little bit about what you do.
The art of wine distribution
AK: We have a wine distribution business into Africa and our business is called Under the Influence and we’re very passionate about bringing better wines into Africa, better beverages. I think it’s an amazing marketplace, it’s definitely been heavily traded in wines that are at the lower end and I think it’s an exciting opportunity to start bringing some of the best that South Africa and the rest of the world has to offer into the continent.
BB: I find that fascinating. You talk about the South African producers competing on supermarket shelves in the UK, for example, with Australian competitors, and it’s not exclusive to the wine industry. I think most businesses go, you know what, we want to chase European business, we want to chase North American business, but we live on this continent that is just so dynamic and is so full of opportunity and you’ve obviously spotted some.
AK: Ja, I’d love to tell you that we sat down 10 years ago and we developed this overarching strategy into Africa, but I think a lot of businesses are born from necessity and as a wine business, we literally started out doing wine education. Doing a lot of work in Africa, just in terms of training and education. We started to sell wine in South Africa, but we soon realised that a lot of the industry here is quite tied up in terms of distribution.
By, almost mistake, ended up getting our first customer in Zimbabwe and supplying wine and adding value to them and that’s how the business grew. I think from there the thesis has really grown in terms of the opportunity in Africa and it’s been an incredible journey.
BB: Talk to me about that journey. You mentioned the education side, I want to touch on that. For a lot of people, wine is intimidating, just the environment, especially when you first get into it. You’re not quite sure of the nuances and what you should and shouldn’t be doing and what you should and shouldn’t be looking for. Education plays a big, big role in, first of all enjoying wine, but then also being able to build a sustainable industry out of it.
Important to educate people on wine drinking
AK: Absolutely. I think where we started as a company, we literally ran around Johannesburg and Cape Town and we did wine experiences for guests. We did wine education, but we approached it very differently because wine is a hugely intimidating subject. People get either a little bit carried away, as wine experts and use ‘bully language’ to sort of bully us all into submission with their jargon and their slang. Sometimes how I feel when I listen to some of the financial programmes on the radio.
Actually it’s a very simple thing. It’s about the people and the place and the grape and how those all come together and quite simply understanding what you like and why you enjoy that and then seeking out more of that. That’s been our big focus in Africa, is teaching waiters and sommeliers how to better sell and recommend wines.
Also teaching end consumers that there’s more out there than what they currently are experiencing. It’s incredibly exciting. Doing a wine tasting in a place like Lagos, we literally have 10-15 times more people than you can fit into the room. Everyone is incredibly excited to learn and grow their wine knowledge.
BB: That’s incredible. Allister, tell me about some of the challenges you face, operating a business like this in Africa.
AK: I think the first challenge we had to overcome was a logistical challenge. How do you get beverages into different parts of Africa? One of our very early customers was a lodge in Rwanda and being young entrepreneurs, you say yes to everything. The guys chatted to us and said, wow, we love your wines, we love the education work that you’re doing, can you get wines to Rwanda.
We said ja, of course, we do that all the time and then basically had to figure it out. Literally, every market we’ve gone to, we’ve gone into the customs clearing areas, we’ve gone into warehouses, we’ve met with people, we’ve really dug into the whole process and that in itself has become a skill set in our business.
In Europe you don’t have to think about how to get something from A to B, but in Africa it has to become an area of expertise. It’s been incredible. Then I think also just trying to position our business in terms of better beverages has been challenging because a lot of brands that are very heavily distributed in Africa are easily available.
Just getting consumers and hotels and restaurants to consider higher end products has been a challenge. I must admit, once it kicks in, it’s actually an amazing process. Our customers really take it forward strongly, it’s unbelievable.
BB: As it stands right now, how many countries in Africa do you operate in?
AK: We operate in 14 countries in Africa and that includes Seychelles and Mauritius.
BB: So a fairly large chunk of it, but still a long way to go. Do you see lots more room for growth Allister?
Africa is a great growing market
AK: There’s a huge opportunity for growth. I think the big challenge for us is being one of focus and one of really digging into individual markets. But I also think a lot of businesses these days, especially early businesses like ourselves, after the five years wins and huge technology scale growth and possibly looking to sell the business in a few years.
But we have a 40 year time span in this business in terms of where we want to take it. We want to take it to an incredibly large scale, but also with very deep roots and adding a huge amount of value to our customers. To do that we’ve employed a lot of technology. My early days were in the technology side, so we’ve actually got a technology side to our business and we’re building systems and value-adds for our customers all the time.
BB: The various markets and various countries that you operate within Africa, are they very different? Is each one very unique or are you spotting trends? Is it similar to South Africa? How different is the wine landscape on the African continent to what we’re used to back here in South Africa?
AK: Brad, I think you make a very good point. First of all, Africa is not Africa, it’s comprised of individual countries and actually, more importantly, individual cities which make up the major hubs of Africa. Every single country and city has its own nuances, its own patterns of consumption. Some markets it’s very heavily focused on tourism, so you’re tapping into big hotels and large groups. Others are more local consumption.
I think one thing that we have noticed in Africa is there’s a book end approach. You’ve got a lot of consumption on the lower end and then you’re also seeing a lot of consumption on the ultra high end. Some of the famous statistics of Shoprite selling more champagne in Nigeria than it does in South Africa by many times. For us it’s interesting.
There’s a huge consumption at both ends and for us it’s quite interesting to look at migrating some of the lower end consumption and teaching people about wine and actually getting them into the mid to high end brands. Also that the high end, getting the guys off their French cognac and French champagne and teaching them the fundamentals and quality behind South African wine.
BB: How has South African wine been received?
How is our wine received on the rest of the continent?
AK: Very, very well. I think it’s still a long road ahead. A lot of the countries still have a huge affinity towards European wines, specifically France and Portugal. Places like Angola is almost 90% Portuguese wines, but the fact of the matter is we’re right on the doorstep of Africa. Internationally we are recognised as making some of the most exciting wines in the world and we’ve got amazing price points.
We’re delivering better quality at every single price point, in my mind and we do work with some international wines. As a business we also import and send international wines into Africa, but our major focus is delivering on the promise of South African wine.
BB: Allister, you mentioned technology and the systems and that that you are putting into place, how much as technology aided in building this business? Obviously things change dramatically and things advance, does that excite you or almost scare you that it’s difficult to keep up with the changes and the advancements, to keep your business up to date with it?
AK: Ja, I think technology, in a technology space, is sometimes very difficult because things go out of date quite quickly. But when you apply technology to a traditional business, you can make huge strides and huge advances. We built a system called Beverage Intelligence, which basically connects us with our customers in each market and they have a portal where they can manage their beverage offering.
There’s digital brand education videos and all of the wine estates that we have, they can monitor the performance of their beverage list and that’s been a really exciting process. It sort of stemmed from one of our partners who is a most amazing consultant and all of our customers asked him questions every single day and advice. So we had to come up with a way to digitise him.
That’s been our big mission and it also creates scalability. In Africa you’ve got to be careful, sometimes a market can fall through, another market picks up, so I think technology is crucial because if you throw too many hands at the problem, that can be very challenging when a market drops and you’ve got all these fixed costs to worry about.
BB: It also becomes very costly, as you say, overheads, you want to try and keep them as low as possible as it grows and it’s amazing how you can employ technology. Allister, if people want to find out more about your business and perhaps they’re listening to this on the continent and would like to know more, how can they get in touch with you?
AK: Sure, I mean they can visit our websites which is undertheinfluence.co.za and then our technology platform is beverageintelligence.com and I’m on Twitter @undertheinfluence. Would love to hear from anyone on the continent. We travel constantly, so the chances are that if someone in Ghana wants to meet up, we could probably do so in the next couple of weeks.
BB: I love the name of the business, I think it’s fantastic and I want to wish you all the best. I think it’s amazing what you guys are doing and keep it up. You’re flying the flag proudly for South Africa and we love what you’re doing.
AK: Thanks so much Brad, I really appreciate it.