M’Hudi Wines: Breaking transformation barriers

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IN THE FAMILY: M’hudi Wines is a family-run business with local and global market penetration. (From Left: Lebogang Rangaka, Diale Rangaka, Malmsey Rangaka, Rae-Leigh Adonis and Senyane Rangaka. Front: Kwena Rangaka). Photo: Provided.

Twelve years ago Malmsey Rangaka, a trained clinical psychologist, pursued a business opportunity in wine farming. Known as the “matriarch” and “live force” behind M’hudi Wines, she and her husband Diale are pioneer entrepreneurs, heading South Africa’s first black-owned wine farm.

Over the past decade, M’hudi Wines has grown into a three-tiered business. The “wine side of the business” as Rangaka explains, boasts with three ranges of wine: the Platinum brand, the Say Lovey brand (launched last year) and the sparkling wine brand known as “Palesa”. The B-BBEE winemaker has also recently received two Premium Awards from South African Airways for its red wines. M’hudi is also involved in fruit production which includes guavas. Beyond wine, the business has also introduced a tourism aspect to it. They now have a wine-tasting facility, bed and breakfast and a venue to host dances.

Despite their rapid growth, Rangaka says they never anticipated this success when they bought the farm through the Land Bank in 2003. She doesn’t regret the move, although Gauteng remains home, she wouldn’t trade her office in the vineyard for the traffic in Johannesburg

Finding a strategy that worked

Initially they just farmed fruit and by 2005 they had produced their first wine.  This year (2015) marks their tenth year of making wine. “We started with nothing basically, other than our savings, our pensions and our home which we gave to the bank,” says Rangaka. The family had to learn about wine-farming along the way. She says it was difficult to find acceptance in the industry especially from industry players. “We had to take our brand out there and we still had to convince the consumer that our wine is as good as the wine of our

PARTNERS: Twelve years ago, Malmsey and her husband Diale Rangaka uprooted from Johannesburg to build a new life as winemakers in Stellenbosch.

PARTNERS: Twelve years ago, Malmsey and her husband Diale Rangaka uprooted from Johannesburg to build a new life as winemakers in Stellenbosch.

neighbour.”

Penetrating the local market proved exceptionally challenging. Two years after they started wine production, the family decided to change their strategy from 70% local distribution and 30% exports to 90% exports and 10% local distribution. “That’s where we got our breakthrough and our success,” says Rangaka.

In 2007 Rangaka heard UK retail giant Marks and Spencer (M&S) were visiting the country and subsequently invited them to M’hudi Wines. M&S found their wine to be of good quality and they struck a deal to have it distributed in the UK. In 2008 their distribution expanded to Germany and the US. Their reputation with M&S overseas helped their brand grow locally. “People took notice and shortly after that we were in Woolworths stores and restaurants and hotels in South Africa.”

Additionally, annual trips abroad and exhibiting at wine festivals led to a presence of M’Hudi in China, Ghana and Nigeria. Rangaka says the exhibits present an opportunity to create demand, however distribution of the wine remains challenging. “We have to find some way to unlock distribution channels in the market.”

They don’t have money, they don’t have capital, and they don’t have land.

In 2008 the Rangakas proactively looked for other black producers in the wine industry. They found several women in the industry without their own farms, starting wine brands. Rangaka initiated an alliance, African Business Alliance, in an effort to influence the market and the government to help these small black-owned businesses grow. She served as the first chairperson and was recently re-elected.

She says the alliance has had small successes, but the challenges are overwhelming. One being that it is difficult to get retailers to list wines, especially when government doesn’t follow through with programmes.

Challenges as a B-BBEE winemaker

“Government has got good programmes but the programmes do not have a good impact.” Rangaka explains that government does not understand that most B-BBEE companies start out with nothing. “They don’t have money, they don’t have capital, and they don’t have land.” Businesses don’t even have collateral to offer banks when making loans. “The help is difficult to get. It is very little and whenever it comes, it usually comes too late.”

This is a general problem for most black-owned businesses, but worse for those in the wine industry. In 2008, there were up to 40 black-owned wine companies. That number has shrunk to six, says Rangaka. Companies have fallen along the way because of a lack of assistance by government and unwillingness by the industry and retailers to give an opportunity to these companies to list and buy their products.

The misconception is that black-owned companies want to be given money. Rangaka says all they really want is to have their products listed for the opportunity to promote their brands in the market. Of all the retailers and hotels M’hudi spoke to, only a few were willing to distribute their brand.

SEASONS GREETINGS: Malmsey and her nephew Tshwarelo examine vines to see if the grapes are ripe. Photo: Provided

SEASONS GREETINGS: Malmsey and her nephew Tshwarelo examine vines to see if the grapes are ripe. Photo: Provided

Rangaka says having a farm gave authenticity to their product, which helped gain presence in export markets. “People in the export markets want to follow where the wine comes from.” She explains that their success was driven by their partnerships with bigger companies in the industry. Two years ago, she realised that in order to build up the volume and quality of wine produced she would need strategic partners. “If you can’t beat them, join them … It’s not all bad out there. There are people willing to help.”

Rangaka recently approached Bidvest as a distribution partner.  Their wines now have a presence at restaurants and hotels. She advises small, family-owned businesses to partner with bigger companies in order to grow. “These are business development relationships that we establish purely on a business level not on a B-BBEE level.”

Rangaka says there is “resistance” to B-BBEE because people assume black-owned businesses want to be given things “because they are black”. Rangaka advises that businesses represent themselves as opportunities for bigger companies to develop. “[Partnering] is better than going to a company and asking to be a B-BBEE partner. We are nobody’s B-BBEE partner, and it works for us.”

The entrepreneur describes their business venture as a journey with learning curves.  “I’ve learnt that there is no business where you start today and are successful tomorrow.”

She says entrepreneurs should follow their dreams but be prepared for the road. “Fall, stand up, adapt yourself, but most important thing; lesson learned. Don’t repeat your mistakes.”

* This article was featured in Finweek magazine.

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