Brand Partner | October 2020 | Africa update

As we all look back on the immense challenges of 2020, and look forward to new opportunities and easing of trading conditions in 2021, we wanted to share some of our journey this year, and individual market conditions. We hope that this is useful for your planning, as we engage on 2021 planning together.

2020 outcomes for Under the Influence

As our previous updates have outlined, we took very swift and decisive action in March, and this was in hindsight the correct decision as lockdown and export bans took their toll. We are happy to say that we have rehired our team members, and taken on some new talent as we look to 2021.
On the customer success front, our training interventions were well received, and here is a recent Leaderboard from our Wine101 online course. It was so well received that we extended the complimentary training window, even though most of our customers are not able to order at this stage. In addition we have assisted our customers with revised lists, helping them to move through their stock on hand. This is not a great outcome short term, but will be beneficial to their cashflow, and enable a better restock and optimised stock holding.
New channels to market have been successfully executed and are ongoing. These include an acceleration of our Partner model. We are taking our learnings from implementing drinks businesses of our own in Zambia and Kenya, and providing our Partners with the same level of service and the customer success and drinks distribution management software we have built. We enable our Partners to access our drinks brands and customer base, and integrate Beverageintelligence and Together Store, and our team, logistics, processes and systems. These channels enable our core focus of premium on-trade, and premium off-trade and direct to consumer sales and brand building.
We are very proud to have the Together Store in five countries in Africa by the end of December. We are busy rolling out Ghana and Botswana.

Channel development was a big focus of my presentation on the WOSA | How to do business in Africa webinar (Minute 46 for our input). We have come from a trading environment, where single channels to market dominated, and were typically dominated by lower priced retail brands. Our mission as a business, since 2008, has been to bring better beverages into Africa. This was the big focus behind focusing on premium on-trade and direct to consumer, with the requisite investment required being education and capacity development on the continent.
Since the We Are Africa hospitality tradeshow was cancelled this year, we had to reach out to that community of customers and hospitality players in digital format. Click here to view the fireside chat with Allister, and some of the stories of building a wine business in Africa.

A view to 2021

We are cautiously optimistic for next year, but only because of the hard work done this year on customer success, opening up Together Store B2C channels and accelerating our Partner program. Here is a quick market overview:

Namibia: we are seeing the country open up now, with land borders opening. There is an anticipation of local travel from Namibians and South Africans, in a limited way, for the next 6 months. Our customers are only opening up 40-50% of their properties. More here.
Botswana: a very slow opening up to other countries is taking place, with strict quarantine rules for inbound travellers. Botswana is hamstrung somewhat by a limited international airline network, relying heavily on Johannesburg, and to a smaller extent Windhoek. Our customers had a busy August and September with local guests, but this has subsided now and there is pressure on government to open up more. Most of our customers are operating at 30-40% of their properties open, on a cost recovery basis. We have a new Partner on the ground and are accelerating a wine club and Together Store with them, in addition to fostering an expanded sales pipeline for when things turn.
Zimbabwe: there are some green shoots in this important market, with local travel quite strong and some international Guests arriving this month. For example the Vic Falls Hotel has only chosen to open in November, and others have opened in October. Also very limited guest bookings for the rest of the year, but there is a big focus on hopefully targeting South African guests for the December season. Logistics remains a challenge with the JHB hub only operating Airlink flights, but Flysafair and others will start to make inroads. Kenya Airways and Emirates are active. More here.
Zambia: A key Hub for us, where we have staff on the ground. They have been very busy supporting our Victoria Falls region and Zambian customers over this time. Local travel has been strong, and the country has opened up fully to international travellers (with some testing required), but this has not led to a large influx of Guests. International travel sentiment is still limited, until a vaccine is implemented.
Malawi: We have a fantastic new Partner on the ground, and have been supporting them to grow a B2C channel, while fostering the hospitality pipeline that is currently dormant. The Local travel market is limited, but the low Covid rates make it an attractive destination for when things open up (this is the case for most of Southern Africa, apart from South Africa).
Kenya: A key Hub for us. Our team did an incredible job with customers, as we had to take stock back and assist them with payment plans. East Africa operates much more seasonally than other markets, and their key season did not materialise. The country has opened up, and local travel has been encouraged. A similar trend has emerged with about 30-40% of the lodges open on a cost recovery basis. Business travel has remained very low, but fortunately our restaurant and B2C channels are strong. Interestingly about 40% of revenue in September and October so far are in our craft gin portfolio. Local wine importers are slashing and burning prices and shifting stock, and we are choosing to focus on value added activity and new channels. We do foresee some importers folding in 2021. There is an anticipation of a small bounce in December and January for international Guests. More here.
Tanzania: A similar outcome to Kenya at the moment, but the country did open up to tourism before Kenya and other East African countries. The local health infrastructure is a concern for international Guests. We are excited to be working on a new channel into this market, with key customers.
Uganda: We have established a new Partner in a key hospitality hub in Uganda. We are busy sending up a test order for initial hospitality customer sales and B2C channels. More here (East Africa panel discussion)
Rwanda: We have been working very closely with our established Partner, who was almost 100% reliant on the lodge and hotel business we opened up together. This is a focus Together Store market, and new channels are being opened up rapidly. Rwanda has opened up and is a very slick experience for visitors, as their government is very proactive on all matters that impact tourism. Since it is a low volume, high value travel market, we do anticipate a more rapid turnaround in 2021 for Rwanda.
Ghana: Our established partner on the ground has adopted the Together Store, and we have a focused campaign for year end B2C sales. I was in Dubai in February working on listings with Marriott and Accor, and we hope to push these through with our local partner in 2021. Business travel remains low, but Ghana is starting to become the focus Hub for West Africa (see below).
Nigeria: Nigeria has even more security and stability concerns this year, with a plunging oil price, and the government removing a subsidy on petrol for consumers. The rolling protests and police brutality have been shocking, and under reported in international media. Our established partner has been in business for many decades, and we assisted them on the wine setup of their broader hospitality supply business, so they have been exposed over this time, but have pivoted very well into B2C. Hotels are open again, but trading at very low occupancies. Once international business travel slowly recovers, we do foresee a good latter half of 2021 in Nigeria, depending on how domestic issues and safety concerns are managed.
Seychelles: Seychelles is open for business and has been one of our first markets to reactivate. A visit to the market in February certainly helped this. More here.
Madagascar: We were delighted to see how efficient and well managed the Madagascar logistics and safety measures have been implemented. It is a small market for us, but will grow, and the properties there are targeting South African and European travellers. More here.
Ethiopia: Ethiopia has a growing hospitality industry, but has been impacted even more than our core markets in this space. Their Addis properties are operating at quite high occupancy, especially with expat Guests, who form part of the UN and diplomatic postings, as well as local Guests. We were in the market in December last year and February this year and we have an exciting new channel in process.
South Africa: We have limited customers in South Africa, many of whom have been with us since 2008, and they are slowly rebuilding their businesses. Many of them have had over 100% occupancy in September, but are on a cost recovery strategy. We are busy assisting them to move through all their stock before they order, and have done two Lowveld trips to grow sales and customer success programs.
Mozambique: A small market for us, and always tricky because of the volume of grey goods entering the country via our favourite bottle shop in Komatipoort. Our customers are reporting very low occupancies, and are aiming for a bounce back over the festive season with more local travel and South Africa Guests.

To summarise, the above is the status quo, and we are seeing green shoots in the markets we work in, but the key for planning in 2021 is to approach these with a huge focus on customer success, and assisting our existing channels for the long run. The recovery will be long and slow, and we will be there for our customers to rebuild teams through our training programs and drinks offerings for Guests. Forward bookings in hospitality in Africa are looking extremely good for 2021 as bookings for this year have been deferred to 2021. If the vaccine is not in place and/or travel is either locked down again, or not undertaken due to consumer confidence, then the year could be another long slog in that channel.

We are fortunate to have rapidly accelerated our Partner programs and B2C channels. This has been a blessing in disguise, as we build a stronger, deeper, and more diverse channel to market, and roll out our training and brand building tools in the form of Beverageintelligence and The Together Store.

We are looking forward to meeting in person and discussing in person too.