A business ripe for the picking?
The idea for Los Angeles-based Heritage Link Brands began fermenting after Cuffe attended a wine festival in Soweto and met the owner of a local winery – Seven Sisters – who was struggling to get her wines distributed (read original story here).
“She shared with me that South Africa had a $3 billion wine industry and of that less than 2 percent is owned by black South Africans, who are 85 percent of the population,” said Cuffe.
Cuffe invested $70,000 in personal savings and 18 months on extensive market research and product development to make sure she had a winner on her hands. She launched her company in February 2007. “There is truly something going on here that needs to be brought to the attention of wine consumers and wine lovers everywhere. So that was the ‘a-ha’ moment.”
Cuffe is targeting her wines primarily to “millennials,” the 21-30-year-old demographic that she feels is driving the wine industry and who “completely skipped over the beer category in terms of their entrance into alcohol and went straight for wine.” Cuffe is also pitching her products to the “conscientious consumers,” who care about the positive impact their purchases are making, and to her African American compatriots, who she said feel “a kinship with these great people in South Africa.”
One of the biggest challenges Heritage Link Brands faces is navigating the various alcohol laws in each U.S. state, the majority of which prohibits Cuffe from selling directly to consumers. Cuffe said she is forced to go through a distributor, who in turn sells through a retailer, such as a grocery store or restaurant, who then sells to the consumer.
Cuffe said it’s a painful process that’s akin to dealing with “51 different little nations” and a “thorn in my side every day.”
As the business has grown, Cuffe has branched out from just representing black South African-based wineries, to distributing wines from the broader Diaspora, “where people of color in general could look to us as a possible go-to market for their wines.”
This is why Cuffe recently secured a U.S. government-backed loan from the Small Business Administration to make sure her wines hit the palates of wine lovers attending the World Cup this June.
“Our goal is to make sure that the natural occurrences that happen around us, like the World Cup, are leveraged in such a way that we make the wines within our portfolio household names.”
TAKING IT TO THE EXPERTS
Mike Veseth, the author of popular wine blog The Wine Economist, said Cuffe had a “very interesting story” and he was optimistic about her chances of cracking the difficult wine distribution business.
“South African wines are popular these days,” said Veseth, who teaches global economics at the University of Puget Sound and authored the book “Globaloney 2.0: The Crash of 2008 and the Future of Globalization”. “They represent good value at a time when many consumers are interested in trying new and different products.”
Veseth said Cuffe’s social agenda of promoting black-owned wineries is in line with the South African government’s goals, which has identified the wine industry as a key part of its Black Economic Empowerment (BEE) initiative.
“Consumers would need to be educated about the BEE wines, of course, but I think they would be receptive to the message,” Veseth said.”I find that very few wine enthusiasts are aware of the history of South African wine or the BEE program, but they are very excited once they learn.”
Timothy Faley, the managing director of Michigan University’s Zell Institute for Entrepreneurial Studies, agreed that Cuffe’s business had potential and liked that she was primarily targeting millennials, but added there were “several incongruities” in Heritage Link Brands’ marketing strategy.
“They seem to be focused on the demographics of their target millennials, while ignoring the essential psycho-graphic characteristics of this group in their marketing strategy,” said Faley, who added Cuffe needs to leverage social media platforms such as Facebook, Twitter and YouTube to market directly to young consumers. “Heritage Link Brands’ appears to be marketing their product like a traditional wine to a traditional wine connoisseur.”
Faley said millenials and other first-time wine drinkers have “unique needs” and that Cuffe’s marketing strategy needs to go beyond the “traditional ‘full bodied’ description of wines” and embrace something more direct, such as “this wine would be great to share with your friends with steaks and burgers.”
Faley said Cuffe should look to emulate the success of the Yellow Tail wine label, that used a very direct marketing approach and educated distributors to make it easier for them to recommend their brands to millennials. “The company is doing many things right and could definitely increase their sales growth by being more focused on the needs of their target segment.”
Mary van de Weil, a branding expert and the founder and CEO of Zing Your Brand consultancy firm, saluted Cuffe’s passion and vision, but said the emotional connection to the brand was missing.
“I don’t really get the sense of this indigenous population that she’s really supporting,” said van de Weil, who agreed with Faley that Cuffe needs to speak more directly to millennials and offer a more compelling message in order to get them drinking her wines. “They (millennials) want language as though you were talking to them on Facebook. That’s why I feel let down by the ‘values’ section on their site. It feels like it’s keeping me at arm’s length.”
Van de Weil said what often happens with entrepreneurs is that in the process of growing a company they become distracted and tend to lose their focus or voice. She said a website is often the public’s first destination and your value proposition needs to remain clear and compelling.
“I keep saying brands are like puppies – you have to keep an eye on them,” Van de Weil said, noting Cuffe needs to offer more personal anecdotes, like how she left her fancy job at Proctor & Gamble to follow her passion to help African entrepreneurs. “Their message is strong, but I want to know more about their story. It’s like a meal that doesn’t totally please you.”