Wine Enthusiast Magazine / September 2008 / Carving Out a Niche in Wine & Spirits

Carving Out a Niche in Wine & Spirits

What does it take nowadays to break into one of the world's oldest businesses?

Before Matti Anttila rolled out his own brand of high-end Brazilian distilled rum as Cabana Cachaça in 2006, the California native had worked for JP Morgan on deals in Brazil and handled the top financial post for his family's real estate development company. He learned all he could about business expansion, high-end marketing and proper funding—and spent his free time partying in Brazil.

 

So it was a natural pairing, when it came time to launch his own entrepreneurial endeavor, to back luxury pastimes with his already-established business sense.

 

Anttila's business grew out of a personal passion for the finer things. Sipping a caipirinha, the Brazilian national cocktail, at a Santa Barbara restaurant in 2005, Anttila realized that few Americans knew this drink. When he asked the bartender what kind of cachaça was in the cocktail, he learned it was a low-end industrial grade. The third most distilled spirit in the world, cachaça is mostly consumed in Brazil.

 

"In the back of my mind, I thought, 'God I'd love to incorporate Brazil into my business life," says the 29-yeqar-old Anttila. "The initial step was as a consumer—in every other aspect of my life, I'm consuming premium goods. There were no premium cachacas in the U.S. market."

 

Identifying a hole in the market and knowing how to fill that niche are two keys of entrepreneurship. That's how innovators are getting into the wine and spirits game these days—by being smart, connecting the dots and doing what they know.

 

Cameron Hughes worked for The Wine Group, the third largest U.S. producer, before creating Cameron Hughes Wine in 2001. As a neégociant, or middle-man, Cameron Hughes Wine sells huge lots of affordable-but-good vintages to places like Safeway and Costco.

 

"There are two ways to come into the game," says Hughes, 36. "If you have good capital, then focus on a high-quality vineyard and use a custom crush facility and a consulting winemaker. Do not buy a winery."

 

"If you don't have a lot of capital, then keep it virtual" or be a middle-man, he suggests. Creating a private label requires low overhead and none of your own equipment.

 

"The most profitable aspect of the business is where you're selling wine direct, possibly through a wine club," says Kevin Toomajian, an expert with COPIA: the American Center for Wine, Food & the Arts in Napa. "It doesn't have to be associated with a winery. You're guaranteed an audience and you get to decide what you send them. Wineries themselves are ramping up their direct-to-consumer channels, not having to pay distributors."

 

As with any entrepreneurial endeavor, competition is stiff in wine and spirits, but it's not impossible to break in. If you can "stay a step ahead," you're golden, says Toomajian. "What can [you] offer that people already in the business can't?"

 

Another way in is to discover a little-known or up-and-coming wine region around the world and import. "You can be one of the first to market extreme value, good quality wine," says Toomajian. "We saw that with Australia and now we're seeing it in Chile."

 

It's always important to read up on your market niche, learn about the industry and allow a certain measure of failure, warns Hughes. Until you're a known quantity, "nobody's going to talk to you. It's a credibility game. Being a négociant takes quite a few years of building up relationships and trust."

 

"Any successful venture needs to start with passion," says Anttila. "You have to like what you're selling. [Plus,] it's hard to sell something that you're not convinced the consumers need."

 

 

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