No comment from Makro

COMMENT 6 April 2006

From Mark:
Makro, Pick 'n Pay, Shopright, Picardi, Liquor city and Spar are the major local retailers of wine. Not fact but my opinion here. Should I include Woolworths? Perhaps. Wine of the Month also moves a fair volume of wine. That said, the chap who mailed Grape has perhaps failed to see that the independent retailers and the restaurant trade can assist him, but he needs to make an effort and get into the trade. Just an opinion!

Further from 'Bully Boy':

[It must be pointed out from Grape's side that we have no idea who this correspondent is - the email address is disguised and non-operative (clearly it is someone who knows how to manipulate such things!). It might well be someone from the Jo'burg Wine Show seeking to further its interests, it might be an outsider, or it might be a producer as claimed. We are publishing the material, slightly edited, as it seems a valid point being made anyway.]

What a great pity Carolyn has decided not to comment! I suspect the reason is more that she's been caught red-handed, rather than any issues surrounding anonymous emails... as you rightly say the question to answer was yours (Editor) and not mine. I'm ashamed to admit that I won’t identify myself... Let’s be fair here... I'm embracing this new show and I have been threatened as a result. Why would I want to further jeapordise my business with Makro?

I am saddened to learn that others have chosen not to attend purely out of fear that Makro will suspend or cease to do business with them. This is a terrible pity.

Growers/estates/labels wishing to promote themselves through such an event as The Jo'burg Wine Show are making active attempts to develop the market at home. Makro will benefit through consumer-education, rather than suffer any loss through a measly three-day event. It is idiotic to suggest that a high-profile event such as this will do anything other than stimulate the market...a market Makro is currently king of.

Again, therefore, I must assert that Carolyn and Makro are simply trying to bully producers into a mafia-style grip-lock on the market... to the detriment of all of us. I'm going to risk the blacklist because I want a better domestic market to work within. Her threats and short-sightedness will have an effect however. I have asked to be anonymous on their floorplan and not to be listed until just before the show opens, in the hope that Barton & Makro will see innovation and creative-selling when they see it. Assuming, of course, that they're interested.

My contact at The Jo'burg Wine Show has confirmed that several vineyards have declined to participate due specifically to Makro/Carolyn’s threat. They've also confirmed that they have had no contact with, comment from or interest from Carolyn or Makro! That’s right! Not a single discussion with the exhibition ...  so they're actively dismissing something they know nothing about ... and bullying the small guys into following suit.

The industry should demand an answer from Makro.

I'm reminded of a UK article in the trade press where a small grower in Chile was locked into Tesco supermarket, which drove him so hard he made just $.20 a case. He couldn't reinvest in his vineyard and quality suffered (you see, he needs to eat and buy shoes). Tesco dropped him without notice. The comment from Tesco's Wine Buyer (same job title as Barton) was ‘It's not my problem’.

Lets not have this happen here at home.

Answer us, Makro. Help us, Makro. But don’t threaten and bully us. At the very least Makro should publicly announce ‘no objection’ to farms attending an exhibition.

FURTHER COMMENTS Added 7 April 2006

From Mark:
May I enquire as to how the logistics of selling wine at the Show will be handled? Anon, are you represented by any agent in Gauteng?

• The Show website does not give details – We have asked the organisers for a comment on the issue SEE BELOW.

From Johan Nel:
Some would call Ms Barton's avoidance of the issues at hand the typical response of a ‘lilly-livered little corporate chickenish....’ I would not go so far, but my overdeveloped sense of justice and fairplay urges me to ask questions plainly and in public, on an open forum, with my name attached. So here goes:

Dear Ms Barton,

1. To how many winemakers and-producers did you send the email regarding the Jo'burg Wine Show?

2. What exactly was the intent of your message - merely to cordially discourage your suppliers' attendance, or an active attempt to prevent any current or future direct sales to the winedrinkers of Jo'burg?

3. Am I right in interpreting your message as a subtle threat of future boycotting of participants by Makro's wine buyers? If not, please correct me on your actual intentions.

4. What exactly did you mean by your admonishment to the recipients to ‘approach this show with the valuable role of Makro in their businesses in mind?’

5. Would Makro’s wine sales, and your job in particular, be SO vulnerable that it would be threatened by a single event that encourages and promotes wine consumption, to warrant this response?

6. Are you and the management of Makro aware of the  extremely difficult sales conditions and competition our wine industry faces abroad, and the potential impact that this may have on the survival of many in the industry? If so, what are YOU doing to counteract this locally, to promote domestic consumption, and to gain NEW customers to struggling brands (in ways that doesn't benefit Makro alone)?

7. Have you, in any way, attempted to co-promote Makro at this new venture by perhaps offering attendance sponsorships to some producers or by suggesting a Makro stand like the one at Winex, in stead of simply trying to scuttle it by veiled threats?
    

I eagerly await your reply. Should one not be forthcoming I am sure we can continue this debate in an even more public arena than the limited readership of Grape, such as Die Burger, Beeld, Cape Times, Argus or The Star.

FURTHER COMMENTS Added 12 April 2006

From Ingrid Motteux:
Well put, Johan, hopefully Makro will have the sense to respond to your questions, as subtle Ms Barton's threat was not! It is an appalling attempt at bullying - the sort of strategy that was commonplace in the bad old days in this country. Imagine where the wine industry would be now if SFW's attempt to  boycott wine producers who started selling from their cellar doors in the seventies had succeeded?

How it will happen: The organisers of the Show respond to the question of how the show will handle the logistics of selling wine:

The Jo'burg Wine Show aims to provide a very different type of wine event to that previously seen in South Africa. A crucial part of delivering a ‘difference’ has been making this an event where the consumer can BUY wine whilst they are enjoying the tasting experience; not that dissimilar to what occurs in estate/winery tasting rooms every day here in the Cape.

In order to provide every exhibitor with a solution for selling, Frogitt & Vonkel have been signed as the Retail Sponsor. Frogitt & Vonkel are Private Wine Merchants who usually conduct business via telesales, with a credit card and home delivery system. Exhibitors will be able to register wines they are showing/selling with Frogitt & Vonkel who in turn will have order forms throughout the exhibition. Consumers may place their oders at the show via these forms and Frogitt & Vonkel will handle all logistics of collecting payment and delivering the wine to consumers...the service will also include full details of each consumer who purchased your wines.

There is no ‘rule’ or ‘requirement’ to use this service, it is entirely optional.

To which Mark responds:

Great concept but, lets ask a few pertinent questions.
1. How much stock will be held at the show to be bought on the day? Great for the first few who buy a couple of bottles but.....
2.Great concept but will I be paying a courier charge? Or putting it another way, will I get a good price and how will delivery take place?

To which there is a response from Barney Essenhigh, a Director of the Jo'burg Wine Show:

1) There will be secure storage at the event for some selling stock and more importantly your tasting stock. We recommend that exhibitors use the Frogitt & Vonkel service, or an alternative delivery service to fulfill orders. We suggest the public would rather this than have to carry bottles around themselves. This system/service is closely modelled on that of successful consumer shows in the UK and elsewhere. Don't forget, you don't even have to sell wine at the show if you would prefer not to.

2) Frogitt & Vonkel have prepared and end-to-end service for sales fulfillment. It is optional. It is non-exclusive. There is a percentage charged by F&V for providing the service. Full details are in the Exhibitors Manual and there are areas of flexibility depending on circumstances (such as wine already being in Gauteng etc). Our Sales Manager, Magdel De Roubaix, is always available on 082 991 7350. There is also a delivery charge which will be clearly indicated on the Order Forms. Again, there is no requirement to use this service, nor is there any requirement for the public to use the service either.

And Michael Fridjhon casts fundamental doubt on the wine-sales scheme:
I believe that the industry needs every possible opportunity to market its wines - especially given its lack of focus on domestic wine buyers when the Rand was weak. From this perspective - notwithstanding my own involvement in Winex - the Jo'burg Wine Show is a welcome addition to the local scene.

I'm not as sanguine as the organisers about the legality of their proposed sales arrangement. Winex has been trying to set up a satisfactory retail/wine-selling opportunity at both the Cape and Johannesburg shows for some time. After substantial consultations with several specialist liquor lawyers (in which our proposal that transactions are treated as if they were mail order was shot down) we think we may have a format which works for the Cape, but not (yet) Gauteng. In short, the licensing problem is more complex than it initially appears to be. If transactions are legal (assuming the proposed format is applied) I would very much doubt that delivery from stock held at the show would be allowed (since this negates the mail-order fig-leaf). I'm also curious about how the same licence will accommodate the wholesale transactions which are the stock-in-trade of the business, as well as retail mail-order. Also, how will the show's premises be registered with the authorities in respect of that licence.

FURTHER COMMENTS Added 21 April 2006

From Ryan Sowray, involved with sales for an important Cape wine estate:
All things considered as a producer who is constantly trying to sell wine in a formidable environment;
Firstly cost and return on investment is carefully considered when participating in any event. Winex and such well marketed shows cost about R6000 to attend (10000 people come through the doors) and I could sell direct (order forms). If I use simple math I would have to sell 37 cases x 12 at R40 per bottle to break even before factoring the hotel flights and car hire, thus closer to 100 cases by the end of the day.

It would seem that the Jo’burg Wine Show is offering much the same opportunity at the same price. Competing in a room with 200 other producers no one is likely to sell 100 cases of wine.

Secondly; if I were to undercut my retail price and sell at wholesale I would wreck my relationships with all retailers and restaurateurs that have supported me over the years and devalue my brand in the process. (when times are tough people do resort to survival tactics.)

Thirdly; if I came up with a promotion which used the R6000 to R18000 (I would spend in participating is an event like this) I could sell a fair amount of wine through many of the retail groups and further build good relations.

An easy response is that shows like these are advertising and PR - Wine producers are in the business of selling wine not continually buying advertising!

Carolyn Barton of Makro responds to the intiator of this whole debate and the question of her email:

Makro is supportive of the local wine industry and actively encourages all marketing efforts that producers and distrubutors make use of to encourage the consumption of wines in South Africa, where consumption is declining annually. This includes cellar door sales, mail order, gourmet dinners, trade shows and consumer shows, including the Jo’burg Wine Show, WineX and the like.

I apologise if my e-mail has threatened, disgusted and/or saddened any producer, distributor or member of the public. My e-mail was sent to the distributors, wholesalers, agents and producers with whom I have direct dealings and thus a personal relationship. I have absolutely no objection to any producer partaking in the Joburg Wine Show and have no intention of blacklisting any producers who support the show as we welcome shows like these that bolster interest in wine and most likely would benefit us at a retail level. My e-mail was not voicing concern over attendance, but rather to ask that participants give some thought to their pricing at the show, not undercutting our retail prices and supporting us by directing consumers to retailers to make their future purchases.  I also wanted to encourage producers to consider the money they are spending on participating in this show.  In the current difficult sales conditions facing the wine industry, I would encourage producers to make use of retailers' existing customer bases to actively market their products at a cost similar or less than participating in one show in one city over one weekend.

FURTHER COMMENTS Added 23 April 2006

From Barney Essenhigh, a Director of the Jo'burg Wine Show:
I would like to thank everyone for showing so much interest in what is going to be a truly spectacular show! We must be on to a good thing to have caused this much fuss.

Just to clarify the legal issue. I have been in discussions with our South African attorneys over several issues that were bought up on this site. The most pressing being the licensing of the event. Gallagher [where the Show is to be held] have assured us in writing that their licence covers the show. Gallagher contacted Superintendent J P Rautenbach Provincial Commander: Liquor Control: Gauteng on 20th April 2006 to get absolute confirmation. They received an answer this morning confirming that ‘The South African Police Service has no objections to your request in light of the licence you are in possession of’.

I think that this clears up the issue and hope that we can put this one to rest now. If anyone has any further queries on this issue I would appreciate it if they were directed to Magdel De Roubaix on 083 991 7350. We are happy to show a copy of all the Gallagher/SAPS correspondence to anyone who really needs to see it.

I would also like to thank Carolyn Barton for clearing up the sticky issue surrounding the email that she sent out previously. I will make sure that my sales team re-establish contact with all the wine farms that informed us that they could not exhibit because of the ‘Makro blacklist’ and let them know it is ok to exhibit now.

I look forward to meeting both Michael and Carolyn at the show. Two VIP tickets are on the way to you.

With all this talk of doom and gloom in the South African wine industry I believe it is time for a new kind of wine show. The Jo'burg Wine Show will hopefully de-mystify wine for the average consumer. It will be an interactive, fun and educational event that will stimulate the domestic market. This can only be good news for everyone in the South African wine industry.

From online retailer Mark:
Ryan, just a further point, would you want to stand for 10 hours 3 days on end? Probably not. Another negative against the show. Carolyn, well done and thanks for answering Johan. So, over to all the Makro bashers for your next tirade. oh yes, did I ask this earlier in the 'thread'? How will I benefit from my orders placed? I guess what I am getting at here is how will they manage to sell me the wine at a better price than currently available in Gauteng? What happens if I order a mixed case of 12 from twelve different farms?

FURTHER COMMENTS Added 25 April 2006

Michael Fridjhon wonders whether the legal side is really resolved....
I'm delighted there is so much goodwill flowing from what appeared at first to be a matter fraught with controversy. However, I'm not sure the licensing matter is so easily put to rest. I assume that the Gallagher licence is an on-consumption one. As such, it makes it legally possible for wines to be tasted at the show. I'd be quite surprised if the same licence could be used for the off-consumption sale of wine. This has certainly been one of the issues which has complicated Winex's quest to deal with the off-consumption sale of wine at both the Cape Town and the Sandton shows. Perhaps the Jo'burg Wine Show organisers want to get back to the SAPS and obtain a confirmation from them that they are happy about both types of transactions. This clarification would certainly expedite a resolution to a problem which up until now has been ruled - by the attorneys at least - as intractable.