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Blogvertising : Blogging for Wine : Stormhoek Wine : The Real Thing or A Tempest in a Wineglass? : Orbital Wines Goes Into Administration in the UK

By Andis Kaulins

Stormhoek Wine? Ever heard of it?

Hugh MacLeod at the Gaping Void wrote in September, 2005:

"The Stormhoek project is getting more and more interesting, at least to me. In the Stormhoek brochure I posed the question,

Will the idea-virus spread far enough that suddenly, instead of one or two people knowing about the wine, suddenly tens of thousands of smart, connected people in the UK know about it, and are talking about it?

Is that enough to launch a national brand?

Although it's still too early to answer that question definitively, my gut tells me, the blogvertising model works. But I think it takes two years."


This is an intriguing story with many elements of the imponderable.

What is the scoop on Stormhoek Wine beyond the blogging hype? Was the blogging marketing campaign successful ?

Their UK importer, Orbital Wines Ltd. of the South African RAATS Family Wines, has just gone into administration (corporate bankruptcy). This is a remarkable development for the UK importer and supplier of a Stormhoek Wine whose blog-based marketing in the UK has allegedly been so effective. Unfortunately, we do not know the details of the financial downfall. How much wine was actually sold to the consumer?

Graham Holter at Off Licence News, "the voice of drinks retailing" writes:

"There is apparently widespread interest in the Stormhoek brand, which achieved growth of 36 per cent last year, yet remains a relatively small player in the South African market. Steve Barton, director of FirstCape supplier Brand Phoenix, will not be among the bidders.

"If your company and your philosophy is not consumer driven, you are going to have an increasingly turbulent time in the commercial cauldron that is the UK off-trade," he says.

"It is aggressive and demanding, but it's also fantastically rewarding if you work with retailers. The only way to do that, however, is with a proposition that the consumer is actually buying. That takes investment. If your brand hasn't got some momentum you are going to find it increasingly hard in the UK off-trade.

"We are all going to have to face the uncertainty of duty. It's going to be a massive fixed cost for companies the size of Orbital because they haven't got products of momentum that can carry you through that added cost.

"The economy is going to have a tough year. The next 24 months will be a great test for the companies that are communicating with the consumer. With the economy tightening up, people are definitely not going to spend money on products they're not aware of or that don't give them a reason to buy. You're only going to be as successful as your ability to read and interact with the consumer.""

What is the future of Stormhoek?

At Waitrose, Stormhoek is listed as "out of stock" in the cache page and is no longer offered at all at the current website page.

The Tesco Wine Club apparently has some bottles for sale online.

The Pinotage Club asks an intriguing question.... where is the wine bottled? and a commenter answers .... in South Africa. And we ask, what vineyards are accounting for this allegedly huge volume of wine sold in the UK?

There is no question that Hugh McLeod's blog campaign for Stormhoek at his blog Gaping Void made waves and most certainly did some interesting pioneer work in blog marketing. Stormhoek was e.g. the 2006 Award Winner for Consumer Campaign at TheDrinkBusiness.com:

"The Stormhoek Way, Orbital Wines

Described by the judges as ?trail-blazing?, Orbital Wines took an entirely new approach to consumer marketing for its Stormhoek South African wine brand. The company utilised one of the fastest- growing resources, the internet, to create awareness and drive sales. How? By sending samples to UK ?bloggers? ? that?s writers of web-based diaries to the uninitiated ? who then got the internet buzzing with their words and pictures of the wine. Hits on the Stormhoek website have gone from under 500 a month to over 90,000, which has been reflected in a 20% share of £5-plus South African market in the UK. Praising Orbital Wines for its innovation, the judges commented: ?Very few wine companies are taking these kinds of risks with their marketing."

We were led to this wine by a recent SearchEngineGuide.com newsletter which had a special feature on the fruits of blogging. That newsletter led us to a blog posting which writes:

"Stormhoek was a tiny South African winery when the company began working with UK blogger Hugh MacLeod to develop a social media strategy. MacLeod started working with Stormhoek in May of 2005, and by the end of the year, the winery's sales had doubled. Besides dipping its toes in the blogging waters, in 2005, Stormhoek also launched an interesting campaign where it gave away 100 free bottles of wine to 100 bloggers in the UK, Ireland, and France. The bloggers were under no obligation to write about the wine or Stormhoek, but many did both, and the company's awareness among bloggers skyrocketed.In 2006, Stormhoek expanded on the 'give wine away to bloggers' idea, by setting up 'Geek Dinners', where bloggers around the United States throw their own parties, with Stormhoek providing the wine for free. This idea just further raised Stormhoek's presence in the blogosphere. So what's the end result from all this for Stormhoek? Hugh MacLeod, speaking at last year's South by Southwest festival, stated that before Stormhoek started blogging and involving bloggers in its marketing efforts, that the winery sold around 40,000 cases of wine a year. When MacLeod spoke at SXSW in March of 2007, he stated that the company was at that point selling 40,000 cases of wine a WEEK."

Here's one problem. A wine expert friend of ours calculated that 40,000 cases of wine a week is 2,080,000 cases a year and at 12 bottles a case that is 24,960,000 bottles (25 million !), allegedly sold in the UK. He said this is very unlikely for a wine totally unknown to him.

By comparison, the number one German wine bottler, Peter Mertes in Bernkastel-Kues here in the Moselle Valley where we live, fills about 200 million liters of wine per year, and the number two German wine bottler, Kellerei Zimmermann-Graeff & Müller in Zell, also here on the Moselle (Mosel), fills near to 50 million liters of wine per year. These are huge enterprises.

Indeed, the 40,000 cases a WEEK for Stormhoek is clearly an error, and, if accurate at all, the figure should be 4000 cases a week, as we can surmise from this recent January 8, 2008, posting at Stormhoek, which refers to 200,000 cases a year (that would be ca. 2,400,000 bottles).

The Stormhoek blog writes at Stormhoek 2.0 in a word play on Web 2.0:

"Sometimes the world works in odd ways. In three short years, Stormhoek has grown from zero to about 200,000 cases in the UK market. But this alone, was not sufficient to keep our UK importer and ?partner? financially healthy. And just before Christmas, they went into administration.

While the issues are being sorted in the UK, back at the vineyard, we are busy thinking about harvest and the more mundane things we need to do to get wines made and in the hands of customers around the world.

From down in South Africa, we view this as an opportunity for reinvention: Stormhoek 2.0. Stormhoek has been blessed with probably the most passionate group of supporters in the world of wine. We thank every one of you and hope that we will still have your support in the future.

For those members of the wine trade fraternity who may suffer in Orbital?s reorganization, we are sorry and we are working with them to minimize any problems. We hope that we can make it up to you in the future with mutually beneficial business." [emphasis added by LawPundit]

In any case, our question is, were a lot of Stormhoek bottles sold "on the buzz" at the wholesale level for a wine market in which there was not a comparable demand at the consumer level and is that why Orbital went bottom up?

Full post as published by LawPundit on January 17, 2008 (boomark / email).