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Most respected companies
Wednesday, February 01, 2006
Over the past decade, John Peller has seen tens of thousands of American visitors descend upon his Peller Estates Winery in Niagara-on-the-Lake, and leave as "ambassadors" for its award-winning ice wines.
Now, Mr. Peller, chief executive officer of Andrés Wines Ltd., wants more Americans to warm up to his exotic drink on their own soil. Last year, his company, which owns Peller Estates, teamed up with Chicago-based luxury wine marketer Paterno Wines International, for a foray into the United States, with ice wine in the vanguard.
"Its potential to grow [there] is very significant because there are a lot of people just starting to discover wine," and aging baby boomers are willing to pay up for premium-priced beverages, Mr. Peller says.
He is among the 48 per cent of CEOs in the annual Canada's Most Respected Corporations survey who say they see the U.S. as the most important country for expanding their business over the next three years.
Bill Dillabough, chief markets officer for KPMG, was surprised the U.S. wasn't more top of mind for more CEOs. "What jumps to mind is the huge opportunities in China and India," he says. In fact, more than 22 per cent of respondents saw China as the key growth market.
While many top executives feel the pull of the U.S. market because of its size, proximity and growth opportunities, Mr. Dillabough warns doing business there isn't a cakewalk. "It's dead-on easy to get into the market, but making money is another thing," he says. "It's a highly competitive market . . . You have to understand the differences."
Hooking up with Paterno is a key part of Mr. Peller's plan to sell his premium ice wine to the U.S. market. Andrés' new export strategy meant switching to a clear bottle so that U.S. consumers can see the yellow or red hues of the dessert wines. The slender bottles now have a simpler, white label with more prominence given to "ice wine." And the wine is now sold in a box decorated with snowflakes and a red maple leaf.
"From a breathtaking winter comes a magical wine" is how Paterno is positioning this dessert wine, he says. "It's winter's rare gift."
Andrés has exported ice wine to Asia since the 1990s, and sells it in international duty-free shops, but Mr. Peller still sees the U.S. offering the highest potential for exports.
Although Andrés sells moderately priced wines in Canada, he is targeting the high-end market and white-linen restaurants in the U.S. -- first with ice wines, and later with premium reds and whites.
"The competition [among cheaper wines] is extremely fierce," he says. "We want to do something where we feel we do [it] better than anybody else in the world. Canada's reputation now is that it is definitely the best ice wine producing country in the world."
Andrés, based in Grimsby, Ont., had a tough time cracking the U.S. market three years ago. It was trying to deal directly with distributors not always keen to push ice wine. Andrés now deals with Paterno, a national marketing company that specializes in luxury wine, has its own sales force and clout with various distributors, Mr. Peller says.
Derek Oland, CEO of Saint John-based Moosehead Breweries Ltd., agrees finding the right partner is key to selling south of the border.
The brewery first began exporting to the U.S. in 1976. Moosehead was approached by a U.S.-based beer importer who persuaded the firm to switch to a green bottle with a tall neck rather than the brown "stubby" used in Canada.
U.S. sales peaked at five to six million cases [of 24 bottles] in 1983. "It was a great success, but unfortunately everyone else could see what was happening and they jumped on the bandwagon," Mr. Oland says. As competition increased, and the ownership of its import partner changed hands, annual sales fell to about two million cases by 1997. That prompted a switch to San Antonio-based Gambrinus Co., an importer of Mexico's Corona to the U.S., and it has stemmed the sales decline. "It's still our largest export market," Mr. Oland says.
For Zenon Environmental Inc., the Oakville, Ont.-based maker of water filtration systems, the U.S. market represents about 50 per cent of sales compared with 25 per cent in Europe; 10 per cent each in Canada and Asia and 5 per cent in the Middle East.
"There are some emerging markets that are quite exciting but I still believe that the United States is a great market," says Zenon CEO Andrew Benedek, who lives in Oceanside, Calif. Mr. Benedek acknowledges his firm made mistakes when it began selling to the United States some 20 years ago. Zenon tried selling directly from Canada instead of hiring commission sales people south of the border.
"In a sophisticated market, you have to do things right," he said. "You have to have sales people that know the customers, know the region and know to translate the value of our product to the customer."
China and India might get all the buzz, but most Canadian CEOs are focused on the United States. According to the annual Most Respected Corporations survey of 250 corporate leaders.
Country that is most important to build their business*
United States: 48%
Don't know/refused: 8%
Percentage of CEOs
* Over the next three years
Reasons for choosing most important growth-market/country
Large market to do business with: 31%
Growth opportunity with country: 25%
Close proximity/convenient location: 22%
Already involved in country*: 14%
Best fits our business plan: 11%
Big trading partner**: 9%
Similar market (incl. similar culture): 6%
Percentage of CEOs
* Includes investing in country
** Includes largest trading partner
SOURCE: IPSOS REID
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