MIDMAR LIQUORS
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The Midmar Blend –
Quality service Sweet and sour, high minded cynicism, a hopeful pessimist‌ is customer service and competitive pricing just another oxymoron?
Midmar Liquors FEATURE
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shopping survey shows Canadians abandoning quality service in favour of low prices. In recessionary times many share that sentiment. But here in South Africa, Midmar Liquors CEO George Naidoo is showing that a quality bargain need not be in lockstep with basement service; that best deals can be served with expertise and customer attentiveness. It’s a formula that has grown a dynamic business in a razor-edged competitive sector. George opened his first store in the Cape Town suburb of Parow in 1982. He was the first Black to launch into the liquor trade and he had a staff of four. And in a sector dominated by the selfservice ethos he set out with a novel - many would say contradictory vision: give the public quality wines, spirits and beverages at competitive prices in an informed and shopper friendly setting. Eighteen years on and Midmar Liquors has 34 stores throughout South Africa and a staff of 500. “Back at the beginning it was very hard for non-white people to get a liquor licence. But there was little competition within the sector and margins were a bit higher,” says 29 year old executive director Theo Naidoo. “Now competition is a lot fiercer. My father saw a gap which he wanted to exploit and he has succeeded in doing so. “We are the only Black-owned liquor chain company in South Africa, and it’s been run by my father since day one. And we’ve been a Black owned company since inception and have remained so. I don’t think we’ve punted this aspect enough. “ The Midmar shopping experience is distinctive, not least in a country where customer service expectations are modest. “We start serving the customer from the moment he jumps out of a car in the parking lot. He is approached and asked if he has any returns – empties - and then on right through the store, advice and assistance are on hand
from a staff trained in-house and moulded around the concept of quality customer service. When he has completed his shopping we carry the goods out to his car. “Customers appreciate the extent of this service, its detailed and personal nature. That’s why they keep on coming back. Everybody is made to feel special.” How did competitors react to George Naidoo’s customer-first initiative 18 years
Our strategy going forward is to expand and keep expanding. That’s something we are not going to give up on ago? “At first it was a bit slow because my father needed time to build the business up. But we had very aggressive pricing and customer service to match, and within three to six months he started to see results. “Initially the competitors were not very happy. There were complaints to suppliers – who themselves welcomed a lively new entrant and something different happening - questioning our pricing structure. A lot
Midmar Liquors FEATURE
of them wanted to know how we could get such good prices and so forth.” Surprisingly perhaps the Midmar example has won few sector followers. “From their side not much has happened on customer service, but on our side it is something we constantly strive to improve. “And if you compare our retail industry with prominent ones across the world, we in South Africa are not very customer-orientated. Not at all in fact. But this is what we at Midmar want to change and especially in our industry.” Meantime the market is seeing another and dramatic development - the entry of major retailers. Everybody it seems wants to come to the bottle party. “In the past big retailers weren’t allowed to have liquor stores, but our big retail players like Pick n Pay, Woolworths, Checkers, Shopright and the Spar Group are all going the liquor store route now. “Between them there’s probably close on 2,000 applications for liquor stores across the country and it’s getting very competitive. But having said that I don’t think right now they have proper knowledge of the industry, nor anywhere near the range we have. It’s a very limited range in fact, and their pricing is out compared with us.” Midmar’s response is to continue making itself the store of choice. “So we have these destination stores which we believe our customers will continue to frequent. With our buying power we can definitely be more competitive than anybody, even the likes of major supermarkets. “We’ve got a very big footprint in the Western Cape where most of our stores are located. In Johannesburg, KZN it’s more of a fledgling but we are still doing a serious volume in those stores.” Midmar has four stores in Johannesburg with another opening shortly and seven in Durban with two more imminent. Western Cape expansion will continue. “Overall we’ve identified those areas where we want to
In South Africa there is something like an oligopoly, with the majority of brands sold in liquor stores concentrated in few suppliers expand “Our whole strategy is looking for destination stores where people make a point of looking for Midmar as opposed to a competitor or one of the retail stores like Pick n Pay and so on. A place where they can have a good shopping experience, have a wide selection of wine and retail spirits and everything is competitively priced. ”Our strategy going forward is to expand and keep expanding. That’s something we are not going to give up on.” Within the Western Cape Midmar is the biggest mover of Brand House products – the joint trade name of Diageo, Heineken and Namibia Breweries, combining the sales, marketing and distribution of some of the world’s top premium brands – and second or third in the whole of South Africa.
KWV
de Bruxelles 2010. Brandy makers from all corners of the globe enter this international competition yearly. Since its first release in 2006, the KWV 15 Year Old has won two highly regarded trophies. This includes its success in 2007 when it was awarded Best Worldwide Brandy at the prestigious International Wine & Spirit Competition (IWSC).
KWV – Awarded with top accolades. One of life’s true pleasures, brandy, is a timeless beverage and is as popular today as it was three hundred years ago. Brandy is celebrated worldwide with brandy masters continuously working on perfecting the art of brandy making.
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WV, established in 1918 as a private wine co-operative, has not only become a leading South African alcoholic beverage brand, but has also made great headway in the international wine and spirit industry serving over thirty markets globally. Renowned for creating world class brandies the KWV House of Brandy, situated in Worcester, is home to 120 copper pot stills making it the biggest of its kind in the world. The talented brandy masters at KWV distilled their first brandy in 1926 and today with Chief Brandy Master Kobus Gelderblom at the helm, the quality of KWV’s brandies are reinforced by numerous awards received. The KWV 15 Year Old won a Gold Medal for the second year running at the Concours Mondial
“In 2008 KWV released a Limited Edition KWV Founders Reserve Brandy. This brandy celebrated KWV’s 90 years of existence. Only 1918 bottles, each numbered for collection purposes were produced”, says Gelderblom. This premium brandy won a gold medal for its superior taste and quality at the 40th anniversary IWSC in London in 2009. KWV 20 Year Old, the oldest within the premium portfolio of brandies, won a gold medal for its superior taste and quality at the 15th anniversary International Spirits Challenge (ISC) in London in 2010. “We are extremely proud of our quality brandies and believe that these awards show our commitment to creating world-class brandies”, concludes Gelderblom.
(KWV encourages consumers to enjoy KWV products responsibly. Products are not for sale to persons under the age of 18) www.southafricamag.com
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Midmar Liquors FEATURE
A major importer of Scotch whisky, Midmar also has its own brand labels, Royal Castle and Three Scotsmen the two biggest. “They’ve been a phenomenal success, quite unbelievable. We started with one container in six months and this year I think we’ll top sixty containers. People are looking for quality whisky at a good price, and these brands are selling more in our stores than the more renowned brands like Bells and J&B. Quite remarkable. “In South Africa there is something like an oligopoly, with the majority of brands sold in liquor stores concentrated in few suppliers. Basically you can count on one hand the guys who are running the South African liquor industry. If you can’t get a big brand from one supplier you can’t get it from anybody else. “It’s very concerning, something you have to deal with and I think over the years we’ve dealt with it pretty well. With wine of course there are tons of suppliers, hundreds of them.” In a rapidly expanding and competitive sector, Theo Naidoo identifies three main challenges. “You’ve got to be very careful on location and so forth. A lot of major shopping centres around the country have anchor tenants which tend to be your Pick n Pay, Shopright and so forth. “So if you have a liquor store within such a complex, then when your lease is up for renewal, a landlord tends to give first preference to the anchor tenants. That’s because they all want to open liquor stores. “So you have to be careful you don’t build up a business, and at the end of the day not be given a lease. That’s number one. “Number two – especially in the Western Cape – the rents are now very high, and you have to be careful not to get into a situation
where it ends up costing more than you can afford. In this business margins are small and you’ve got to work on big volumes. “Then there’s a lot of regulation and red tape in regard to getting a liquor licence… you can wait for approval for anywhere between a couple of months and two years. We have a roll-out plan but because of this we can be held up for quite a while, hindering our growth.” Alcohol abuse is a social challenge of course, and one that tends, says Theo Naidoo, to be concentrated in the more developing areas “where there are other and even more pressing problems such as unemployment and poverty. “We have got to sell alcohol responsibly, we’ve always believed in that and we are part of ARA – the industry Association for Responsible Alcohol Use. “Obviously it’s very difficult to control because you do not know the ultimate destination of the product. But we try to be as responsible as possible and are involved with various committees and development projects trying to uplift communities where they have issues like alcohol abuse.” And responsible drinkers may echo happily the words of Goethe - “Wine rejoices the heart of man, and joy is the mother of all virtues.” And for Midmar customers, joy is to be found at a discount and with personal service. “Our policy is shopping at a place where you get value for money together with a service that you don’t associate with value for money products,” says Theo Naidoo. “We offer a top service, open 12 hours a day, six or sometimes seven days a week, and no competitor opens these hours. We are there for the consumer and we want them to keep coming back.” And his preferred drink? “I’m a whisky on the rocks kind of guy. It has to be Scotch.” END
For Midmar customers, joy is to be found at a discount and with personal service
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www.midmar-liquors.co.za