Perdeberg, Rex Equus and the Icon

My friends in the wine industry tell me that there is more or less a hierarchy of wines. At the bottom end of the better quality wines you find popular premium, followed by super premium, ultra-premium, and then the cherry on the cake, the icon wine. Depending on where your wine finds itself on this hierarchy, you would be able to charge more or less for your wine. A strong brand will bring more customers to the cellar and will enable you to sell more wine to existing customers. To develop a brand, it is important to have a clear understanding of your product offer and strategically deliver a consistent message through every action and interaction with your product and your customers.

This makes it obvious to me that you would very much like to be viewed as an icon wine. And here lies the snag – although you would like to be seen as an upper-end wine, the consumer ultimately decides what level of quality you are. And therefore what price they would be willing to pay for your wine. And how much of your wine they would like to buy. And to what extent they would be willing to act as customer evangelists for your wine!

There’s more. To put a top quality wine in the market normally requires more resources than a lower quality of wine. Your terroir or soil needs to be aligned with the quality of the grape. You mostly also find that the yields for the higher quality grapes are lower than otherwise. When you talk to the viticulturist, he or she will tell you that the quality of the wine is decided in the vineyard. This only happens when it is a good wine. When the wine is not so good, ownership of the quality is denied, or the winemaker will tell you that the grape quality was a bit suspect to start off with. And in spite of the terroir and the process in the winery, the consumer still decides. Marketing spend also goes sky high! Tough when you do not have the final say!

People apparently are a bit fickle as to what price they are prepared to pay for what wine. Reputation and brand (the two probably go hand in hand!) are important issues. The history of the winery is a point of importance as well. The longer back you can trace your lineage of good quality wine, the more aristocratic you may appear.

Obviously, just the idea that your wine is an icon or falls in the ultra-premium range, gives you tons of bragging rights! The truly classy people don’t do it outright though; but rest assured they love the idea.

Now where does Perdeberg fit in? It is a co-operative started in 1941 in the Agter-Paarl area. It derives its name from a mountain range close by, the Paardeberg, which is the name the Dutch gave it way back. Apparently there were a lot of wild zebra and quagga that used to roam the area. In the early days, these beautiful animals used to wander freely through the vineyards.

Like a number of other wineries, Perdeberg is a bulk wine provider. However, in 2005 Perdeberg made a decision that it was going to venture into the bottled wine market. Although they currently still move 75% of their wine into the bulk wine environment, I am more interested in what they are doing with the other 25%!

Amongst others, they have developed an easy drinking wine for the female segment of the Black Diamond category, and is actively marketing it in black residential areas. I also noticed in the SAA in-flight magazine of June 2010 that the Perdeberg Pinotage Reserve 2008 is one of the wines available in business class (couldn’t sit there – had a cheap ticket!). And I also had the privilege of tasting some of the 2009 Perdeberg Pinotage Reserve about 3 weeks ago at Perdeberg when I took a group of USA MBA students there for a visit. What a surprise! And at R53 a bottle! It was a delight – so much so that I bummed a few bottles to give to a group of corporate executive education students I was involved with as well!

But still it is not what I am really excited about! They also decided to make, bottle and market a new brand, Rex Equus, the King of the Horses! The cultivars selected are Cabernet, Shiraz, Sauvignon Blanc, and Chenin Blanc. And the prices range from between R180 to R240 a bottle. Squarely in the icon range – and this from a bulk wine provider! On their website, they state that “Passion and dedication has shaped this premium range, adding a personal and intimate touch that ensures these wines will be enjoyed for years to come. Rex Equus: a labour of love.”

Pretentious of them? I do not think so. I tasted the Cabernet and it was very good – easily as good as some of the other high-priced wines I have come across recent years.

The new Rex is a 2009 Shiraz/Cabernet Franc/Petit Verdot/Malbec blend. Rhys Van Wyk, the marketing manager, tells me that Perdeberg will only release the best wine possible under the Rex Equus label, be it a cultivar or a blend. Should quality allow it, they will release a new Rex every year. However, they are perfectly willing to wait a few years until the wine team feels the quality justifies the Rex brand. This, in my opinion, is the best way to go about to build a brand in the icon category.

My interest in this wine? That an upstart in the bottled wine industry could have the courage to challenge conventional thinking and launch a new brand in the icon category! That it could ignore the bulk wine label and history and boldly venture forth into aristocrat company!

Of course there will be detractors that will tell me that it is still very early days. That Rex Equus is not yet a brand but a label. That they would not have been the first, and definitely will not be the last to make such a daring move. And of course they may be right.

I am comfortable with this. Somehow, however, I feel that here we have something different. I do believe that they had to get out of the bulk wine industry. Nobody thinks back to a bulk wine they consumed in some or other idyllic scenery with nostalgia. For brand building purposes it was important that they had to move out of that segment. I also do believe that they have managed to come up with great quality. Whether the market at large will decide to buy at those prices is something one can only speculate on for now.

Rest assured – I for one will be tracking this wine very closely in future. Rex Equus – the King of the Horses – an icon in the making?

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4 Responses

  1. Jhandre says:

    In my view, their reserve range wines are some of the best value buys around. Unfortunately the Rex Equus is not good enough to command the prices they ask. I have only tried the Sauvignon Blanc which is a lovely wine (got it through a friend for R30 a bottle) but pricing yourself in the league of Vergelegen White does not put you in their league in terms of quality. I guess you can ask any price you want, it is after all your job to sell it!

    • johanhburger says:

      Hi Jhandre, I do agree with you that their reserve range is great value for money. What makes me interested is to see what will pan out in future. Will they be able to create sufficient brand awareness to be able to sell the Rex at the price points indicated? Your last sentence is the important one. Just making a good wine and pricing it at a high price point will not create the brand! They will need to go out and develop a whole host of interventions to create the awareness required for an icon wine. Will they succeed? I also like their guts to do something else than just making bulk wine with a bit more in the bottled environment. Worse case scenario the Rex does not sell. Even if it doesn’t, it could very well lead to greater awareness of their reserve range!

      • Jhandre says:

        I just believe that a winery can’t create a icon wine simply by setting out to create one. It just happens on its own when consumers suddenly take note and become willing to go great lengths to obtain it. There are hardly any icon wines in SA. Only 2 comes to mind: Kanonkop Black label Pinotage and Boekenhoutskloof The Journeyman and they are icons because the fact that they are rare and very difficult to get hold of as well as being of superlative quality. People might think a wine like Vin de Constance is an icon wine but I disagree as you can drive up to the winery any day of the week and buy a few bottles (admittedly at nearly R400 a bottle). There are many similarly priced bottles that are getting long unintended cellaring time at the wineries due to their overoptimistic pricing.
        I believe Rex Equus is a good idea but they have the pricing totally wrong and one can’t even taste it at the winery! I think they would be better served to follow the example of Warwick and Simonsig by creating fantastic quality at decent ( perhaps half of current Rex Equus prices) prices, building a following and then putting prices up gradually as the brand builds more equity.