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The Error for Margin

Businesses fly because profit margins are comfortable. The wine industry isn’t one of those. No, somehow there’s a strange beauty that drives it. Even the really awe-inspiring, big guns with shelf-flooding brands like Blossom Hill can’t continually boast double digit profitability – the wine industry isn’t therefore very attractive to stock market quarterly reporting.

Short-term strategies in this industry are as sustainable as a broken dam wall in the arid Karoo and value gains are only ever built on long-term decisions. Equity is thinly layered up over generations not months, so even the giants take a longer strategic view of product development and value cycles than other companies in similar industries.

Yet everyday more friendly lemmings join us, scampering over the precipice of logic into a boiling sea of wine.

I can understand the hobby winemaker – the guy who’s made his millions in banking or medical insurance. Or even my mate, Big Bart, the hungry filmmaker, who is making a Bordeaux Blend in his bath next vintage. The hobby winemaker knows it is going to cost him. Profit is measured in the raised eyebrows of jealous peers and the slurred smiles of friends. Hey, even we get a kick out of those reactions.

I admire the bright-eyed marketing guru, who has cleaned up in direct selling of Vitamin C, or sold her share in “the” hottest ad agency. These firecrackers bring fresh zip and sparkle to the wine game. They show us how to think out of the wine box.

There are also hardened campaigners who join our ranks, somehow emerging alive from even more fatal industries. In SA we have the legendary restaurateur Ken Forrester. He serves his enveloping brilliant white tablecloth charm for the betterment of South African wine and we are grateful for it.

Then there are the young winemakers, giddily committed like over-achiever bees to a buzzing hive of late nights and wine-stained hands, joyfully enslaved by seasons, torn and teased by the weather; their skill on trial every vintage. Dreams simmer in that long-off look in their eyes, like surfers peering over Shiraz-dark water into the sunrise. And even when the hard knocks start making you look a bit ropey, true winemakers never, ever loose that dreamy look.

It is no surprise then that this industry is less about attaining profit-derived Fortune 500 status and more about joining the ranks of that rare group, the Fortunate 500 (to borrow a line from Ricardo Semler). That’s then perhaps the beauty, the driving energy that keeps this industry thriving. Long live the beautiful buzz.