Saturday, 28 November 2015

28.11.15 The Multinationals Were Never Interested in Sherry

An encyclopaedia could be written about the relationship between the multinationals (multis)and Sherry, and this was the theme of yesterday’s first round table debate at the Scientific Symposium in celebration of the 80th anniversary of DO Jerez. The debate centred on the role of the multis which arrived in Jerez and in the majority of cases fled when they realised Sherry was not going to fulfil their initial expectations. In fact there only remains one: Beam Suntory which represents Harveys and what is left of Domecq: Fundador brandy.

Rafael Navas, director of the Diario de Jerez, introduced the five speakers who were: Mauricio González Gordon (González Byass), Jorge Pascual (Delgado Zuleta), Beltrán Domecq (Consejo Regulador), Helena Rivero (Tradición) and Eduardo Ojeda (Estévez).

(L-R) Mauricio Gonzalez, Jorge Pascual, Beltran Domecq, Rafael Navas, Helena Rivero, Eduardo Ojeda (foto:vanesa lobos/diario jerez)

Sherry is not thinking these days in terms of multis and mergers. Opening the debate, Mauricio González Gordon, president of González Byass said: “Now is not the time for that, what is needed is for everybody to make an effort to reinvent the trade, and many companies are doing amazingly creative things.”

The multis were attracted to Jerez from the 1980s as a result of the boom in Sherry sales. These big companies saw a business opportunity in Sherry seeing it more as a liqueur than a wine, but they failed to see that margins were not what they had hoped for, and that wine does not offer an immediate return on investment. Of course not all multis saw Jerez for its wine and internationally recognised brands; some were interested in the brandy, but with similar results. Others still liked the distribution networks, precursors to worldwide exports, but by the end of the 1990s businesses were reverting to the family model.

The González family, had a long and fruitful relationship with the Byass family over 130 years, but reverted to 100% family ownership after buying out the Byass family in the 1980s and IDV and Benetton in 1997. Mauricio González said “The multis are more comfortable dealing with beer, liqueurs and spirits than wine, in which it is riskier and more difficult to develop a global brand.”
Jorge Pascual worked for over a decade at Sandeman which was sold by Pernod Ricard to the Portuguese multi Sogrape. Jorge, also an ex-president of the Consejo said that the great virtue of family businesses is the closeness and flexibility in decision making as opposed to the single minded management of the multis which, nonetheless brought other ways of doing things with a more global vision. Both models are valid because in the end, behind a multi or a family, there are always people.”

Beltrán Domecq spent 40 years at the old Domecq which, before the spiral of takeovers – Allied Lyons, Beam Global, Beam Suntory – had itself become a “mini-multi.” The main thing he takes from his personal experience is that “the multis were not interested in Sherry,” and the other speakers agreed with him when he stated that Sherry was relegated to the back in the huge portfolios of huge companies in the category “others.”

Eduardo Ojeda fulfilled his dream of working in a bodega at Croft, part of the British multi IDV. The firm had long had links with Jerez and decided to build its own bodega complex where Pale Cream was invented. “The wine was made in Jerez and the decisions were taken in England,” he said, continuing that “the 1990s saw a fundamental change in the mentality of the multis who began looking for more immediate profit, something which Sherry can’t provide.” Attracted by the building of a whole new bodega for Valdespino after its acquisition by José Estévez, Eduardo exchanged the multi for the family business with its commitment to the land, something which made the multis run.

It was roots in the land which led Juaquín Rivero to resuscitate the old family bodega of Rivero CZ which the bank had snatched from his forbears in the form of Bodegas Tradición. His daughter Helena, now bodega president, believes that having the roots and attachment to the land which the multis lack is the key to keeping family businesses going, as they think in the longer term. “Sherry can’t be squeezed in the way that some products can, something the multis take to the limit, and which brought Sherry to its latest crisis.”

A final question was “why have the Sherry bodegas not taken the plunge and become multis themselves?” Mauricio replied that Sherry was the precursor of world distribution in the XIX century but it was neither established with its own structure outside Spain nor through third companies. “We (González Byass) were strong in Spain where we began diversifying into other Dos, Rioja, Cava… but family firms have limited resources and lack a change in culture which is not easy.”

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