ONLINE INTERVIEW – PART 2
Two Wine Brothers: Wine making is a capital-intensive business with the time between when you plant the grapes and you are able to put bottles on the shelves of retailers is measured in years. How has the global recession impacted your ability to raise capital?
Tim Pearson/7Springs Vineyard: Building a wine making facility from scratch is a very capital intensive business, you are correct. I am in a fortunate position to have an established business which has helped fund the development of the vineyard, winery and tasting room. Vaughan and I are going to use money we have in our pension funds to finance the building of the winery and tasting room, so you can see the absolute commitment we have for Seven Springs (the name, co-incidentally comes from the seven natural springs in the nearby spa town of Caledon).
|Architect Rendering of Seven Springs Winery|
The global recession has had an impact on my UK business but this has not been significant. We have merely stood still, in terms of growth, for a couple of years. What impacts us most is currency fluctuation. To give you an example, since we purchased the land in 2006 the £ Sterling / South African Rand has varied between 11 Rand to the £ up to 18 Rand to the £. This effect will obviously have the reverse consequence when it comes to exporting our wines.
So to answer your question; we have not needed to borrow a penny (or should I say a cent) from the banks. At the moment we have put the winery build on hold as the current exchange rate is around 11 Rand to the £. Once the £ strengthens against the Rand we will transfer the money over and commence the building.
Two Wine Brothers: The post-Mandela political landscape has been soft on "property rights". How are you managing the risk of losing your vineyards by government expropriation?
Tim Pearson/7Springs Vineyard: First, can I say the current political situation in South Africa is far fairer than it was during the apartheid era. I have no idea what will happen in South Africa in the future, just as I do not know who will be in power in the USA or in the UK in a few years time. If there are government ‘land grabs’, or expropriation as you put it, so be it, we will have little influence over that.
We are in the fortunate position of having an income, and a capital asset with no debts, from my business in England, we own our house here in England and one in Le Marche in Italy. So, as the saying goes, we do not have all of our eggs in the one basket. Life itself is not without risk and I fully understand that things can go wrong. I have never been interested in wealth creation; the idea of creating something special from scratch is much more appealing, so we do have provision for different scenarios.
Two Wine Brothers: Now that your first vintage (2010) is behind you and resting in barrels/tanks, when do you anticipate releasing your first wines? Can you elaborate a little on where and when consumers will ultimately be able to find your products in general, and in the United States, in particular?
Riana van der Merwe, Winemaker
Tim Pearson/7Springs Vineyard: We will release our first wines, Sauvignon Blanc and our un-oaked Chardonnay, around July/August of this year. We will await Riana’s, our winemaker, decision as to when the wine is ready to bottle. We have no commercial pressure to ‘get the wine on the shelves’ and would rather release the wine when it is perfect to drink.
Our lightly oaked Chardonnay (in second fill barrels) and our Syrah will be ready mid 2011. For our first year we were going to release only in South Africa and the UK, concentrating on building our brand and our market in our ‘home’ markets. However, we have been overwhelmed by the interest that we have had from the USA and are reconsidering our options regarding the US. We have been in talks with Fiona Phillips, who runs an online, South African only, wine retailing business. Fiona, is English but based in Franschhoek, South Africa, and is establishing her business to export these wines into 26 US states from May 2010. Check out the Cybercellar website www.cybercellar.com as she has an exceptional portfolio of wines at very reasonable prices.
Two Wine Brothers: We look forward to the opportunity to experience the 7 Springs Vineyard wines as they become available and wish Tim Pearson and his family much success. Please take this opportunity to visit his website – 7Springs Vineyard!
Thank you, Tim!Two Wine Brothers,
Brad & Terry Johnson