Wine entrepreneur looks to sip success at World Cup
TORONTO (Reuters) - When you think of your typical soccer fan, you don't picture them holding a glass of wine in their hand. Beer is definitely the drink of choice for diehards, but entrepreneur Selena Cuffe is hoping to use this year's soccer World Cup in South Africa to convert some of them.
"When we started this business it was always with 2010 in mind, because the spotlight is on South Africa for the World Cup," said Cuffe, 34, who in 2005 founded Heritage Link Brands, a Los Angeles-based company that imports wines produced by black South Africans.
The idea for Heritage Link Brands www.heritagelinkbrands.com 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.
"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, who a month after returning to the U.S. started her company. "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 and her husband, both Harvard graduates, invested $70,000 in personal savings and 18 months on extensive market research and product development to make sure they had a winner on their hands. They officially launched their company in February 2007.
Despite growing up in California and spending some time in the famous wine-producing Napa Valley region, Cuffe never considered herself a connoisseur and admitted that in the beginning she didn't know her Pinot Noirs from her Merlots.
"Mixing up varieties of wine, going to pitch customers and really not knowing a whole lot about the wine industry," Cuffe said were some of the mistakes she made, but added she was able to compensate by offering a strong value proposition to clients, based on her passion and the market research she had done. "The things I didn't know, thank goodness our customers knew."
The first year they sold just $100,000, said Cuffe, but last year that jumped to $1 million and Cuffe expects revenues to grow by 35-40 percent this year.
Cuffe smartly targeted her wines to grocery stores and other consumer markets, such as Kroger's and Supervalu, which helped her avoid a larger recessionary hit. However Cuffe admitted orders from a distribution deal with Walmart-owned Sam's Club stores have fallen significantly.
"We've somewhat buffered some of the hits some of our major competitors or colleagues have seen, who have done business primarily with restaurants," she said, also conceding proceeds have been mixed from deals struck with United Airlines and American Airlines to serve Heritage Link Brand wines to their first-class patrons. Cuffe said while sales from American are up; United's are down. "Corporations are not accommodating a business-class ticket from L.A. to NYC - you better get in the back. So we've seen a reduction in purchasing from that perspective."
Cuffe is targeting her wines primarily to "millennials," the 21-30-year-old demographic that Cuffe said 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." In this regard, Cuffe compared the South African wine industry under apartheid to the U.S. cotton industry during slavery, adding that "those two industries built two countries and it was really on the backs of slave labor."
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."
Despite the challenges, Cuffe remains true to her original goal of running a business that incorporates the broader agenda of changing peoples' perceptions about Africa and promoting black South African entrepreneurs. To emphasize this point, Cuffe said it was transplanted vines from South African that started the Australian wine industry in the early 1700s.
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."