by Caletha Crawford
Not many people would view perusing the wine section of a local supermarket as a teachable moment, but that’s exactly what Selena and Khary Cuffe aim to create with their product. Each bottle of wine in their Heritage Link Brands portfolio is an opportunity to explore wines produced by African and African-American vintners and help move them a step closer to prosperity and possibility. Today this family-run venture’s seven brands are sold in 1,000 stores in 41 states. Armed with a recent $200,000 Small Business Administration loan, the Cuffes are poised to uncork Heritage’s full potential.
Though the idea of starting their own company had always been attractive, the Cuffes couldn’t have guessed their paths would lead them to the wine business. But as luck would have it, Mrs. Cuffe, who serves as the company’s president and CEO, was in South Africa during the Soweto Wine Festival in 2005 and became intrigued. “You didn’t think of Soweto in terms of wine,” she said. She found excellent offerings alongside some troubling facts. “South Africa has a $3 billion wine industry but less than two percent is owned by black South Africans,” she said. “When you look at the South African commerce, wine is analogous to cotton in the U.S. It has been produced off of black slave labor. Of the 4,000 wineries in South Africa, only two are black and family-owned.”
While the wine discovery may have been happenstance, everything that followed proceeded according to a strategic plan. Though sampling the product might have sounded like a fun way to conduct market research, the newlyweds, who had recently learned they were expecting their first child, took a more sober approach. The couple tapped into their educational and work experiences as well as their bank account, investing $70,000 of their own money, to get started.
Mr. Cuffe, the company’s CFO, has a master’s degree from the John F. Kennedy School of Government and they both have MBAs from the Harvard Business School. Their post-graduate professional careers helped them build upon their educational experience. “I worked for Procter & Gamble, which has a really good reputation for bringing products to market and building really solid brands that people know for generations and generations,” Mrs. Cuffe said. “I think that training helped us to focus on how to think about this.”
After market research proved their idea viable, the pair set about identifying the brands to bring to market. This required a subsequent trip to South Africa and focus groups that pitted their wines against established competitors in blind taste tests. Once the brands were selected, it was time for package testing. This was their opportunity to tell a compelling story to entice undecided shoppers, while also doing a little educating. “Heritage Link Brands was never created to be a wine company,” said Mrs. Cuffe. “Wine is a product that helps us change perceptions about Africa and her diaspora. What inspired me to do this was really being sick and tired of the negative perceptions about the continent.”
Such lofty goals are not without their challenges. The first hurdle was learning the ropes in a new country. “There’s a big cultural difference. The American style of business is different,” Mr. Cuffe affirmed. For example, Mrs. Cuffe refers to the saying “pregnant women’s time,” meaning it can take nine months to get things done.
The two also had to get up to speed on how South Africa’s past still impacts residents today. As an African-American couple, they felt there would be a kinship between them and the black producers. What they found were racial and ethnic barriers with those identifying as ‘colored’ or mixed-lineage on one side and those identifying as black on the other. “I didn’t expect for us to be perceived as more colored than black and for that to play a role in how people perceived us—good or bad,” Mrs. Cuffe said. “It wasn’t a stumbling block for the producers we work with, but for some that we were considering, it did become an issue.”
Meanwhile, working in the States presented different obstacles. Currently, South African wines make up only about one percent of the $2.1 billion dollars in annual U.S. wine imports according to market research firm, Mintel. Unlike French or Italian wines, which enjoy robust sales here, South African wines have not traditionally been held in high regard—if they have been thought of at all. Poor quality wine from the region has been part of the problem, according to Gillie Brandolini, wine buyer for Sam’s Club. “There’s a lot of product in the world, and there wasn’t anything [from South Africa] that really stood out; those wines were kind of so-so. But in the last five to ten years, the product has been quite good.” Brandolini opted to stock Heritage after learning about it through Sam’s Club’s parent company, Walmart, but stresses his decision to buy the wine was ultimately based on the product. “It comes down to the quality in the bottle.”
In addition to Sam’s Club, Heritage can also be found at Albertsons, Shaw’s and Whole Foods. By focusing primarily on supermarket distribution, the Cuffes have been able to maximize their consumer exposure and minimize headaches. “We are working with customers who are high volume in an effort to reduce costs in shipping, inventory and warehousing,” Mr. Cuffe said. He hopes that this strategy will help catapult the company from 14,000 cases sold in 2009 to upwards of 30,000 in the current year.
The downside to selling to big chains is the constraint put on acceptable retail prices, especially now that the economy has soured. “The price points have reduced at supermarkets significantly,” Mrs. Cuffe said. “The wines that are under $15 do better than those that are over that point.” According to Mintel’s findings, price is a chief concern of shoppers of late, giving domestic brands a big advantage. The good news is that after a dip in overall wine sales in 2008 (down 3.2 percent from the previous year), sales results for 2009 are expected to show a ripening market with a 2.1 percent increase.
Heritage plans to be part of the recovery by continuing to target specific demographics. “We recognize that we have key markets like the northeast corridor, California, Chicago and Atlanta that we want to serve because that’s where our customers are,” Mr. Cuffe said. The company defines its ideal consumers as wine drinkers who fall into one of three categories: African-Americans in their key markets; Whole Foods or Trader Joe’s consumers who look to do good with every purchase; and millennials. To tap these would-be imbibers, Heritage gets the word out through the grapevine, whether it happens via traditional word-of-mouth channels or social networks like Twitter and Facebook.
Though both owners admit that building the business has been a struggle, they also say one of its many rewards is the time they spend together—even if it feels like work permeates all aspects of their lives. “We’re celebrating our fifth wedding anniversary this year and we’ve thought about going to France because it will give us the opportunity to do some wine tasting and competitive analysis while we’re on vacation,” Mrs. Cuffe said. “But then we thought, let’s go the Caribbean and not think about wine. We’re still trying to figure out the balance.”
