Entertainment and hospitality boost wine company's revenue.
Ascention Wine Estate founder Darryl Soljan tells a cute story about turning a $35 bottle of wine into a $300,000 event.
Soljan was trying to drum up support last year for his corporate entertainment facility at the Matakana winery, north of Auckland. He sent off a dozen bottles of Ascension's
The Benediction, with a handwritten note, to 12 entertainment promoters.
A couple replied with thank you notes but then Soljan received phone calls from musicians and impresarios Gray Bartlett and Ian Magan. They wanted to know whether Soljan would host the Hollies.
It was a gift-horse he wasn't prepared to look in the mouth and in January the Hollies duly played The Air That I Breathe and He Ain't Heavy, among other hits, generating revenue of around $300,000.
"We netted a six-figure sum," Soljan says of the winery's share. To parlay a case of wine into six figures is an incredible piece of salesmanship.
He had just engaged in 12 months worth of post-GFC restructuring. It's fair to say the balance sheet was strengthened courtesy of 1970s pop harmony.
Soljan, of course, comes from winemaking royalty but he and his wife Bridget wanted to forge their own fortunes away from the family's Henderson estate.
Fleeing the nest initially involved employment as assistant winemaker at De Redcliffe Winery, which, like Ascension, also runs an entertainment business.
Soljan also tried his hand as a sales rep: "I was shit at it. I bought more from wine shops I visited than I actually sold, I think."
But his experience, particularly his dealings with the supermarket chains, firmly established a strategy for his own business, even if it was a lesson in what not to do when making wine.
"I didn't want to sell wine to [supermarkets]," is how Soljan puts it.
Instead, he decided to make and sell it himself, buying around 4ha of prime Matakana land in 1994.
"The day I finished my real job, I handed in the keys to my company car, got the train home and walked up the stairs to see my 9-month-old daughter and 2-year-old son playing on the floor," he recalls.
"I thought, 'Holy mother of God, what have I done'. We had sold virtually everything we owned. I was 30; Bridget was 26."
Vines wouldn't be planted for two years. Trading wouldn't begin until the turn of the century. Viticulture is a capital intensive business and New Zealand is littered with the remains of failed independent wineries.
In 2003, Soljan's third year in business, he was astounded when his accountant informed him the business was actually losing money, despite increased revenue and working "365 days" of the year.
"We could have lain in bed and lost money for a lot less effort," is how he describes that sinking feeling. The problem was a failure to properly monitor and measure inputs: "The income was all right but our costs got away on us."
Part of the solution was to incorporate a board structure above management. "It keeps you accountable, increases management discipline and decreases the loneliness at the top," Soljan advises.
He recruited Russell Hay, former senior partner at Deloitte, as chairman and his father, an accountant, to the board.
The new structure bore immediate dividends and in the year to June 2010, the winery managed to double earnings before interest and tax (ebit) while maintaining a tight control on costs.
Today, Ascension employs 28 fulltime-equivalent staff - "There were 45 at the Christmas do," Soljan says cheerily - yet makes only about 5000 cases a year.
But then, wine sales comprise less than half of overall revenue, the rest coming from its restaurant, corporate function centre and outdoor entertainment venue, where the Hollies played.
Visitors to the vineyard topped 50,000 the same year and Soljan wants to develop this side of the business before his attention turns to the export market.
Wine remains Soljan's calling but he insists his business decisions are informed by an unsentimental pragmatism. He is acutely aware of his responsibility to the micro-economy of the Matakana community.
"That's something I really get some reward from; we help pay people's mortgages, school fees and holidays. It's not just the wages; it's the local suppliers [and their suppliers and families]. It's a responsibility."
