Premium success for Kango Wines

Despite the global wine glut, Kango Wines has substantially increased wine sales over the past few years by moving from bulk wine to premium wine production. In 2006 Kango’s sales increased by over 18% on 2005.
Issue date:23 March 2007

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To what do you ascribe your market success?
Kango Wines has adapted to changing market conditions by shifting from bulk wine production to premium wine production. The increased quality is reflected by the numerous accolades we receive. In 2005 our Rijkshof White Muscadel was recognised as one of the top 10 muscadels in South Africa by the SA Muscadel Association. The increased quality of our wines has also been good for company morale and helps to enhance productivity. The global surplus of wines is having a decimating impact on especially red wine producers in SA.

How has the surplus affected Kango red wine sales and how does the company deal with this situation?
The surplus does not have a big impact on Kango Wines as we produce smaller volumes of wine and the bulk of this wine is of premium quality. There will always be a market for high-quality wine. Production at Kango Wines is also well managed and planned; we notify producers of the amount of wine required to satisfy market demand and they adapt production according to these specifications. We have never experienced a surplus problem as our large variety of wine products allows the use of all grapes we purchase. We are also well positioned in the local market, which is less affected by the global surplus than the overseas market. The demand for dessert wines flattened a few years ago.

What is the current market demand for these wines?
Dessert wines are traditionally seen as something you drink in front of a fire in winter. The demand for these wines is smaller than for traditional wines, but the cocktail boom has sparked renewed interest in this market resulting in people experimenting with new ways of drinking these wines. Muscatinis – a muscadel and vodka mix on crushed ice – has become a very trendy drink and people are now drinking dessert wines mixed with gin, vodka and other spirits in summer. Hence there is an increased demand for ports, muscadels, jeripicos and liqueurs.

What is Kango Wines’ market edge over other South African wine cellars?
Our large product range is an advantage and helps to diversify our market and risks. The diverse conditions in which our producers produce grapes – from Prins Albert to Meiringspoort, George and Oudtshoorn – allow us to supply the market with premium-quality red and white wines, brandies, witblits liquors and dessert wines. Our Swartberg Reserve edition is produced from grapes that are cultivated at the second-highest altitude in the southern hemisphere. This farm, Sandkloof, is situated in the heart of the Swartberg Mountains in Meiringspoort and sometimes it even snows in this region. The unique terroir of this area gives this wine very unique flavour and aroma characteristics.

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What are your main markets?
The southern Cape is our primary market – many of our products are sold at bed and breakfasts and restaurants where consumers usually have their first exposure to our products. Gautengers also buy cases of dessert wines at the Klein Karoo National Arts Festival and in the December holidays. The Klein Karoo festival is one of our most important marketing opportunities. This year the company will cater for the whole family with a tasting venue with cheese and wines and a play area with animals for children. There will also be a restaurant area where consumers can buy food per kilo while savouring our wines. We will also host concerts with some of SA’s leading musicians. Kango Wines exports small volumes of wine to Belgium and is in the process of entering the UK market. We want to be well established in the local market before we tackle the overseas market.

What challenges do the company have?
We are a relatively small wine-producing company and therefore our overheads are a little higher than those of larger cellars. Overheads will shrink as the company grows and the economy of scale improves.

Is Kango Wines involved in BEE projects and in empowering the community?
Employees and farmworkers of Kango Cooperative obtained shares in the bottling and marketing plant of Kango Wines. The deal is worth over R4,2 million and in addition to empowering our workers, it has also helped to promote productivity and commitment to the company. Kango Wines, as indicated by our labelling, also promotes the Klein Karoo as a tourist destination. Our labels carry images of the area, such as ostriches, the Kango Caves and the Swartberg Mountains. We are also involved in the community through sponsorships. For more information contact Kango Wines on (044) 272 6065. |fw