Since 1995, South Africa's KWV International has been playing catch up with the rest of the global wine and spirit market. MD Vernon Davis has a long-term vision to turn his brands into household names. He talks to Elliot Lane about consolidation, energy drinks…and Puff Daddy.

Vernon Davis, KWV International's MD, has a dream. "I would love to see Tiger Woods walk out onto the winning hole of the US Open with the colours of Imoya on his caddy. Sadly I can't afford him at the moment."

For the ex-engineer (who admits he stumbled into the wine business through "pure luck"), building brand awareness is the foundation of his vision for one of South Africa's largest wine and spirit operations. Imoya, KWV's brandy (the word means "the ancient wind of Africa"), is one of the key brands to raise the profile of the company in the US as young, affluent, style-conscious consumers in New York and LA are turning to the brand.

"The rapper Puff Daddy has a bottle on his bar in New York, he is the one with the beautiful girlfriend, right?"

Vernon Davis

"I think Imoya should resemble brands such as Oakley or Diesel. The lifestyle products are core while the brandy market should be a spin-off of the industry of Imoya," he said.

KWV International's focus recently has been on breaking the lucrative US market. Davis has been impressed by the in-roads made into the "cross-over market", branding the drink with everyday status-hunting. "I saw beautiful people with the money to enjoy life. When I saw that picture, I knew there was a spill over market for the core liquor market."

Spending wisely and prudently on target marketing is the objective. His only obstacle is money and the financial density needed to tackle the European and US multinationals.

KWV is synonymous with South Africa's drinks industry. Through the apartheid years, its wine and spirits were still available in Europe but sanctions and boycotts stopped the company dominating the white wine and brandy sector. Suddenly the New World regions such as Australia, California and Chile became the titans of the market and South Africa was the poor cousin. Now the ANC, and in particular President Thabo Mebki's drive for a cultural renaissance, are championing the company's brands and pushing South Africa's exports.

"We were stuck on the starting blocks but give us time," said Davis. "When I look at the world wine market there are some people that shaped my life. One of those is Marvin Sands of Canandaigua Wines (the US wine giant). When I saw all the plantings in Central Valley, I was overwhelmed. I looked at our plantings in South Africa and I thought of all these wines, there is no way we can market this much wine. So I asked Marvin, what do you feel about the future of wine. He said we still don't have enough. We will get those who drink wine to drink more and those who don't drink wine to start drinking it. And if a major US organisation has this attitude, I can only swim in its slipstream."

Though he would not be drawn on whether KWV would be interested in tie-ups with either a US or Canadian wine company, Davis did not deny the company will begin to take part in the consolidation frenzy gripping the New World Wine market. Rumours surround a possible deal in Germany and alliances with either Canandaigua and Canadian conglomerate Vincor which has begun to acquire various US-based premium vintners such as Hawthorne Mountain Vineyards and RH Phillips.

Distribution, however, has set the company back and there have been supply fears in its core wine portfolio. Davis admits there were worries, especially in the Sauvignon Blanc grape supply, but the company has reacted to them. "We thought let's wait and let nature take its coarse and hopefully we would have enough grapes for the volume. The other option was to go to our sister company KWV South Africa, which also bottles and packages our products, and procure the grapes I needed from them. We spent some time talking through the issue, and they said they could not source the grapes at the price I wanted," he said. KWV South Africa knew Cathedral Cellars, KWV International's major investment in recent years, is structured at 70% red and 30% white and Davis needed to forecast for upto two years ahead. "They could not deliver as many litres of Shiraz or Cabernet as I wanted but if I went one level higher, and said so much red and so much white, they could supply it. I now have the autonomy to go to other suppliers which is where we are today. We entered last year with our portfolio completely balanced," he said. Whether he actually got a good deal from his sister company remains to be seen.

But since it was established in 1995 as a marketing operation for KWV South Africa, KWV International is now a fully-fledged company in its own right. It has established offices in the UK (Edward Cavendish), The Netherlands (La Concorde Wines), Germany (Eggers & Franke), Scandinavia and New York. The next move will be Asia.

Energising the portfolio

Asia's fascination with the energy drinks market has led Davis to explore the non-alcoholic sector. "We are developing experimental products for the energy drinks market, but it will be a long time until we go to market with this because it could be a fad and we have to judge the environment of this market."

He is adamant this is not the ill-fated alcopop fascination but a concerted effort to break into Red Bull and Frucor's V territory. "I feel we have a wonderful concept which I think will do extremely well. It is not herb-based but will rely on the products of the core business and that's why we will have a difference."

These ingredients will come from KWV South Africa which has interests in fruit preparation. A launch date has not been set but an announcement could be made in the next few months, he said.

For now, Vernon will continue to focus on his KWV wine range and Robert's Rock, the lower-priced red making in-roads in the UK, US and Scandinavia. Some of KWV's UK marketeers are worried the South African brand will be swamped on the shelf by the Australians and a price war is brewing. Davis, however, says he will not compromise his brands for a cheap publicity stunt. "KWV brand maybe priced against a £2.99 Australian Chardonnay in the future but then they do it for a week and push the price back up! I won't do a promotion to shift stock or excess brands, I will only spend the money to promote my brand. And the product will always be my normal standard product so when the consumer comes back, they get the same quality," he said.

The percentage of the KWV brand and Robert's Rock brand, respectively, sold as part of KWV International's total portfolio is as follows:

KWV brand
R.Rock
Europe
16%
10%
UK
40%
35%
Americas
11%
34%