The decision was not taken lightly, especially in the light of the merger quite possibly being a first of its kind for South African agriculture. In fact, it was 10 years in the making – the instigators had already read the writing that had been on the wall for the industry for some time.
In January of 2006, some 400 wine growers attending the VinPro information day were told that consolidation and brand-building was the only route for long-term sustainability. “Powerful companies and powerful brands are needed to keep pace with powerful retailers,” the late Tim Rands, then MD of wine distributor Vinimark, was quoted as saying. “Economies of scale are vital to long-term, profitable survival in the FMCG environment.”
By then, plans were already well advanced in Bonnievale. “We realised we weren’t big enough each on our own to make an impression on the market by supplying the required volumes of wine at the right quality,” long-serving board member and veteran producer Hannes Beukman said at the time. “We also knew that a focus on one brand by all three cellars would make for a very effective operation.”
The man appointed to lead the new phase as chief executive officer was John Barnardt, a financier from the banking sector whose reputation preceded him.
Speaking with hindsight, current Bonnievale Wines board chairman Anton Smuts said Barnardt proved to be the ideal captain for the steering of the “amalgamated ship”.
“He was appointed to lead and supply the necessary ‘glue’ between parties with different viewpoints and expectations. He not only did this but also enhanced and improved the financial sustainability of the entity positively.
“John was not scared to add to the new Boards’ strategy directives and in so doing added to the well-being of the Bonnievale group as a whole.”
A decade later and Bonnievale Wines is stronger than ever, backed by some 100 grape producers.
In a recent review, influential wine writer Neil Pendock said Bonnievale Winery is a prime example of “Next Level wine collectives transforming the South African wine scene by delivering quality consistently above expectations”.
“It’s an enterprise which makes relationship wine: wine made by real people for real people,” wrote Pendock, adding that wine competition judges were increasingly conceding that Bonnievale is “up with the Big Boys from the more fashionable side of the mountain” when it comes to quality.
From an operational perspective, the merger brought about numerous benefits. Barnardt says farmers were suddenly able to deliver grapes to the cellar closest to the farm rather than to a specific contracting winery, irrespective of its location.
“All assets and liabilities of the previous three businesses were consolidated making the winery a sizeable business that has all three premises in full use.”
Furthermore, healthy competition has been established between the winemakers at the different premises.
In its wake, the new enterprise gained access to diverse grape growing area across a large region, allowing for a greater pool of excellent quality grapes and wine styles, and a larger selection and volume of wine available for the market.
“Our bigger business was now able to attract talented management and staff, which enhanced competencies and thereby attracted sound alliance partners too,” says Barnardt.
All wines were consolidated as Bonnievale Wines label and put the winery in a position to invest in building the Bonnievale Wines brand.
In marking the 10th anniversary, Rico Basson related a few key success factors to Bonnievale Wines. He noted that the wine industry was changing to meet challenges through innovation in marketing and management. He said while plans are good, sentiment, ego, and fear were some of their largest obstacles.
As Bonnievale Wines has demonstrated, experts are a key to success. Very often, a valuable contribution can be made by staff and producer members who’ve gained applicable experience in previous occupations outside the business. He encouraged producers to engage staff. “Start by drawing a younger generation into boards.”
Basson said Bonnievale Wines showed how performance management should be a cornerstone of every business – from the vineyard to the markets. “A culture of excellence has been created. In this way, it established what is measured and how to evaluate it constantly. The nucleus should be the performance-driven, customer-centred development of staff while board members should be assigned portfolios and held accountable.”
Joint ventures are important for the future of the industry, Basson said, adding that collaboration need not only occur in times of crisis, but also in pursuit of opportunity. “Choose partners that bring something else to the table than what you have, as Bonnievale Wines did with its strategic partnerships in other grape producing areas.
He further highlighted the importance of these relationships. “Bonnievale Wines built relationships with potential buyers and role-players in the value chain. It may take time, but that’s how trust is achieved. Deals are closed in and with the market, which can convert to contracts prior to harvest. This, in turn, allows every producer to know when and how much they’ll receive, as an incentive for what is delivered to the cellar. There are no surprises.”
Basson said Bonnievale Wines had successfully benchmarked with other wineries and regions while still “playing to its own handicap”. Quality is very important.”
He said thought leadership allows a business to stay in touch with the national and international marketplace while participation at industry events allow you the opportunity to follow up and dig deeper. “Bonnievale Wines has shown how valuable it is for a company to constantly interrogate its own way of thinking,” he said.
