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Walmart and South African Wine

Walmart and South African Wine

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Published by simguybar
Walmart tells its associates the story behind its decision to start selling SA wine.
Walmart tells its associates the story behind its decision to start selling SA wine.

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Categories:Types, Business/Law
Published by: simguybar on Jan 24, 2013
Copyright:Attribution Non-commercial

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01/24/2013

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Sourcing Seven Sisters Wine: A story of growth and opportunity
 _________________________________________________________________________________________________ 
It all began at a wine festival.
In September 2005,
Vivian Kleynhans
set up a tasting booth at her very first wine show -- the Soweto
Wine Festival in Johannesburg, South Africa. Vivian’s
family had recently begun producing wine in theSwartland winelands on the western coast of South Africa.That same day,
Selena Cuffe,
founder of what would become Heritage Link Brands
,
was inJohannesburg for a business trip and discovered that there was a wine festival nearby. She becameintrigued by its location in Soweto, an urban area in Johannesburg which had a reputation for politicalviolence and was also a former home of Nelson Mandela, former president of South Africa. She decidedto spend some time in Soweto sampling wines and learning more about wine production in the country. As fate would have it,
Vivian’s booth was one of the first Selena visited th
at day. After being wowed by a few
of Vivian’s
selections, Selena asked her where she might be able to find her wines in the United States. Vivian responded that she had been having trouble entering even the localchain stores;
the U.S. market wasn’t even
on her radar. As their discussion continued, Selena learnedthat of the $3 billion wine industry in South Africa, only 2 percent of wines available were from blackfamily-owned wineries.
“I had been trying to get into the local stores,” Vivian said. “I ca
lled on some retailers at least nine times in
a year to see if they would take on my product.” Vivian
never secured a commitment from any of them,having been told by a few of the retailers that they would think about it, but she never heard back fromthem. She continued to follow up.
“I sort of almost gave up,” she said.
 
The family’s
story
Vivian is one of eight siblings
 –
seven sisters and one brother.They are from Paternoster (pictured at right), a small fishingvillage 150 km outside Cape Town. In 1981, when Vivian was 16years old, her father lost his job. The family lived in a company-owned house, and, shortly thereafter they found themselvesevicted, having little choice but to split up and move in twos andthrees with relatives and start over.
“It was all very strange to us,” Vivian said.
 
(To learn more about the family’s story 
Because of this life-changing incident, Vivian said,
in my mind, I always wanted to make a change in myfamily
”. Twenty
-five years later, after extensive research and a start in the winemaking industry, she saw
“a real opportunity to start with the change.”
 
Then I found Selena at the festival. It was my first wine show. The idea was to launch locally. America
was so … not in my
mind 
. I had no inclination or idea that I’d ever be able to have a product in the U.S.”
 
 
 
The birth of two new brands
Vivian’s story was
the spark that led Selena, a former brand manager at Procter and Gamble for productbrands such as Pringles and Tampax, to launch a new business devoted to importing and marketingwines from black-owned wine producers in South Africa.
“If I can market potato chips,”
Selena remembered saying
, “I can market wine.”
 A month after her visit to South Africa, Selena launched the new company, called Heritage Link Brands. Ayear later, Heritage Link Brands helped Vivian and her family to launch their wine brand, Seven Sisters, inthe U.S.Seven Sisters is owned and operated by Vivian and her siblings. Eachsister has a wine named after her, starting from youngest to oldest:Bukettraube (
Odelia
), Pinotage-Rose (
Twena
), Chenin Blanc(
Yolanda
), Sauvignon Blanc (
Vivian
), Pinotage/Shiraz (
Dawn
),Merlot (
June
) and Cabernet Sauvignon (
Carol
). Each of them has arole in the company. Their brother John farms the land.
 
Heritage Link brands first introduced Seven Sisters wine to the U.S.market in 2007. They quickly caught the attention of American Airlines,and their 2009 Seven Sisters Sauvignon Blanc (
Vivian
) became thefirst South African wine
in the airline’s history
to be served on flightsworldwide.In 2008,
Selena, who had worked with Walmart and Sam’s Club in her 
past life with P&G, met and established a relationship with
GillieBrandolini
, the Wine and Spirits B
uyer at Sam’s Club, and introduced a
couple of brands into their SKU mix as a test. But the fledglingcompanies struggled to keep up with demand and out-of-stocks, findingit difficult to catch the attention of stronger distributors.
“We had tons of challenges there ... only 12 months of being in business, trying to get distribution, mostly
dealing with large players and publically traded companies. To get
their attention was difficult,” said
Selena.Gillie was patient with them and was committed to telling the Seven Sisters story
at Sam’s Club
.Fast forward a couple of years.
Enter Global Sourcing
In October 2010, when Walmart announced its intent to acquire Massmart, the Global Sourcingleadership team asked
Jack Licause
, Senior Sourcing Manager 
 –
Global Food Sourcing, to work on a
special project:
F
ind stuff” to source from Africa.
He identified wine early on as a viable option. It had an established presence in South Africa, having beenproduced there since the 17
th
Century. It was also produced in a highly sustainable manner.
 
 
“Our goal was to not just go to Diageo or Ga
llo [large multinational producers and distributors of alcoholicbeverages]. We could have easily done that. Our goal was to seek product on the ground in South Africa,where we could potentially make the biggest impac
t,” Jack said.
Jack contacted Gillie Brandolini, who introduced him to Selena.
“In the first conversation I had with Selena, I told her we wanted to make an impact. We
knew, throughGillie, about her relationship with Seven Sisters and other black family-owned brands, and we started
down that path.”
 
“M
y jaw dropped when Jack called
,” said Selena. “W
hat their story represented to us was -- on so manydifferent levels -- so meaningful. My husband and I are African-American. We wanted to tell the goodnews story in Africa th
at no one hears.”
 Jack also connected Selena with
Jason Fremstad
, then the Sr. Buyer for Wine and Spirits (recentlypromoted to Director), to review wines from South Africa for incorporation into their product line-up. Jasonand his team initially reviewed nine different wineries from two distributors. They brought the wines toBentonville to do a tasting. From there, they narrowed it down to three brands. From those brands, SevenSisters was selected. According to Jason, the Seven Sisters brand was chosen because their wineshad several factors in their favor: First, the style of their wines was in line withwhat Walmart customers are looking for: easy and soft to drink, regardless of the varietal. Second, the label has been designed in a way to grab the
customer’s attention and
then delivers a deeper story once the customer haspicked it up off the shelf to read further. Finally, the prices fit into a rangewhich appeals to Walmart customers. As of late August, Walmart has carried two SKUs in Walmart stores: Seven
Sisters Bukettraube (“Odelia”) 750ml and Seven Sisters Cabernet Sauvignon (“Carol”) 750ml. These
wines are currently carried in 58 stores and will soon expand to 300 stores next year. They also carry thePinotage-
Shiraz (“Dawn”) blend at Sam’s Club
. Seven Sisters is a 100 percent Black EconomicEmpowerment (BEE) brand owned by women. The wines have been certified 100 percent sustainable byWIETA, a non-profit voluntary organization that actively promotes ethical trade in the wine industry valuechain.
“From a merchant standpoint, said Jason Fremstadt, “to discover new items and brands from across the
world is one of the cool things about Walmart. We have this access to new suppliers and new items that
you don’t get working just anywhere. The Seven Sisters story
hopefully will be a success story for all of us.
 The impact on the Seven Sisters and Heritage Link Brands
businesses has been small from a revenuestandpoint so far, said Selena. But where Walmart has been unique and helpful is in enabling them to geta stronger infrastructure from a distribution perspective.
“Before, we had no relationships with larger distributors. For them to
get a phone call about our out-of-stocks
 –
those calls went unanswered,
said Selena.
“We are now poised to strategically plan withWalmart and Sam’s Club in a way that just didn’t exist in that first year 
[during the test
with Sam’
s Club]
.”
 

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