The wine industry may be sexy and intoxicating (pardon the pun), but it’s also a saturated one that has seen many aspiring wine entrepreneurs flame out and die.
Business development manager of wine distributor CT Ventures Yong Siang Ching tells us why they’re here to stay.
Many people would kill to be Ching’s (as he prefers to be called) position. As manager of wine distribution company CT Ventures, he regularly gets invited to wineries around the world to try wines.
“It’s not as easy as it sounds,” Ching complains, pointing at his waistline. “I’ve got to watch what I eat.” Vineyard owners treat potential buyers extremely well, especially by feeding them. He says many people in the business have gout (and a gut), resulting from the rich food and wine they’re always plied with. The traveling, while fun at the start, also gets tiring after a while.
And it’s not all glamorous. Ching spends most of his time writing up proposals for potential clients, or meeting up with customers to discuss their CRM (customer relationship management) plans. Whatever times left is spent on planning and development, which is necessary to grow his business in an extremely competitive and cruel industry.
A Cutthroat Business
Ching thinks that the sexy reputation of the already saturated wine industry continues to attract too many people who think they can wing it as a wine entrepreneur. “Its a controlled trade but with no red tape, there are many hobbyists operating,” he explains. Due to the burgeoning economy wine consumption is going up and people are willing to spend more per bottle, he says, so many take the risk.
“But there is one (wine business) closing down every week.” Of the more than 300 companies in Singapore now registered to import wine, only 30 to 40 are operating actively.
CT Ventures started in August 2002 as a wine distribution and consultancy company to private and corporate customers, and F&B startups. They especially target corporate customers, such as banking and finance customers who are willing to splurge on private banking clients.
And the thing that sets them apart?
“We provide a more customized, personalized service which is tailored to customer’s specific preferences to wine,” Ching delivers a well-rehearsed sales spiel. What it actually means is that CT Ventures helps corporate customers source for unique wine that may not available here so as to fulfill their need to feel “special”.
CT Ventures also differ in that they provide niche wines, such as those that come from minor wine-producing regions such as Austria and Spain. In fact, they are only one of four wine distributors in Singapore that provide Austrian wines.
CT Ventures – Going Forward
Ching shares that there has been a recent emerging market to venture into areas of cellar management, so he’s exploring how to combine that aspect into their current business. “We’re looking at providing a total one-stop solution for people looking to build wine cellars, from idea generation to conceptualization to when the wine enters those cellars,” he explains.
“The days of wine chillers are over. It is now a house with a cellar.”
He’s also looking to build even more personalized services targeted at high net worth individuals, such as providing wine concierges – think of a private butler who can help you source for that special bottle to pair with that Beluga caviar. Other niche activities include starting wine tours and specialized wine clubs.
It’s crucial to grow the business differently as well, Ching reveals. F&B outlets are no longer the lucrative money trees they previously were. And most retailers can’t carry the necessary volume by taking on a minimum of 40 cases of one type of wine.
It helped that Ching studied in Australia, and his first job was in Germany, where he was exposed to both wine-drinking cultures. “It was passion and gut feel that I chose to do this. We didn’t take six months to survey – if we did we’d have chosen something less adventurous,” he remembers.
“We didn’t know a lot when we first started, but we learnt along the way.”
Today its annual turnover is just under half a million (and growing at a rate of around 80% year-on-year), and his company now has six staff. Ching didn’t see this as a long term thing. “Now that we have seen encouraging numbers, it looks like we’ll still be doing this.”
The wine business, Ching shares, is an extremely capital intensive one and deep pockets are required to pay for stock, storage and duties. Shipping from South Africa, for example, means a large amount of capital – around $30,000 – has to be set aside for some 40 days.
Other challenges CT Ventures have faced included the perennial challenge for all startups – exposure. “Getting people to know us, especially big customers, was an issue since we were not as prominent. We were a boutique wine business in a big field of players.” Winning awards for some of its wines has helped garner some exposure.
“It was a proud achievement for us when we won 6 medals at the American Express-Tower Club Awards in 2006,” he beams.
Winning One Step At A Time
It was a great win. CT Ventures took 2 golds and 4 silvers from a total of more than 200 wine entries, and it was the first time they participated. More importantly however, in Ching’s view, they’ve also finally successfully won bids in five-star hotels, proving that their wines are good enough to be served in a five-star setting.
Ching believes that you need to have good word-of-mouth in the business – and he’s grateful to those who’ve had faith in him. “There have been some F&B managers who were open minded, and believed in giving us an opportunity.” His wedding customers are also mostly word-of-mouth, with 90% of them being referrals.
His view of wine investments?
“You need a good track record to convince people to invest in wine. It takes a minimum of three to five years to see anything come out of it, so it’s like speculating in futures,” Ching warns.
“For those who say ‘if I don’t make money, I’ll drink the wine’, now that’s a loser’s mentality!”
You can contact Ching at email@example.com.