Champagne campaign

2015-03-15 08:00

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Jay Z and Diddy show their support for Ace of Spades – the kind of publicity no advertising budget can generate

‘The money is not in Europe any more – this is where the money is now,” Gerald Loparco says.

He is the marketing director for luxury French Champagne brand Armand de Brignac, which retails for about $300 (R3?700) a bottle.

Armand de Brignac is more often called Ace of Spades because of the utterly unsubtle ace on its all-gold bottle. The brand has been available in South Africa since 2010.

“We saw a real boost in 2014 with a new distributor,” Loparco says, which prompted his recent visit to our shores to meet suppliers, distributors and those who could become brand influencers.

Champagne isn’t the only luxury item that has tills ringing all over Africa: a study by Bain & Company last year predicted that total

luxury-goods revenue on the continent would hit R26.4?billion by the end of last year, compared with R19.8?billion in 2011.

In Africa, South Africa’s luxury buyers lag behind only Nigeria’s big spenders, as evidenced by the west African giant’s taste for Champagne.

Euromonitor International’s latest figures on the global Champagne market reveal Champagne consumption in Nigeria will reach 1.1?million litres by 2017 – that’s almost 1.5?million bottles of bubbly popped a year, rising from the current 750?000 bottles.

The Euromonitor report, published in 2012, cited “oil wealth, hip-hop, movie stars and an elite obsessed with status symbols” as demand drivers. Nigeria is fast becoming the second Champagne capital in the world, trailing only France – which actually produces the bubbly.

Bigger is better

We may lag behind Nigeria on the Champagne front, but South Africa has the continent’s most developed luxury retail sector. This is largely driven by South Africa’s posse of dollar millionaires: Joburg alone is home to about 23?400 of them and boasts more than 60% (about 71?000) of Africa’s millionaires. In short? Gucci, Fendi, Christian Louboutin, and Louis Vuitton ain’t no thang.

But research suggests this is just the tip of the super-rich iceberg. Bain & Company estimates that South Africa’s luxury goods market will grow by another 20% to 30% over the next four years.

A Euromonitor report released this year indicated that the market for luxury goods in South Africa showed stable growth during 2014, even though the rand took a massive hit against major currencies.

The growth of this market has also been sparked by big ballers from out of town who spend their money at stores and boutiques in Johannesburg and Cape Town.

Visitors from the US and Europe choose to shop here because the weakened rand makes local particularly lekker and lucrative for them.

Loparco says that just 70?000 bottles of Ace of Spades Champagne are produced a year and each market – 120 countries – receives a set number.

Four years ago, South Africa got 100 cases, or 600 bottles. Today, that’s climbed to 400 cases.

“Growth in one market requires that we then think about which market we will supply less to,” Loparco says. That annual figure of 70?000 bottles is set, for now.

Demand is rising in Mozambique, Angola, Zimbabwe, Kenya and Namibia. Sub-Saharan Africa is experiencing the world’s second-fastest economic growth, after the Asia-Pacific region – a leap of fortunes that lives in stark contrast alongside the rising cost of living and widespread poverty. Luxury goods sales in sub-Saharan Africa grew 35% between 2008 and 2013 and are predicted to climb by another 33% over the next five years, according to Euromonitor.

Loparco says: “Ninety-five percent of all our [South African-reserved] Champagne is consumed in Johannesburg and Pretoria. That is where the money is. In Cape Town, we see a spike around November and December – the festive season. But it’s all year around in Gauteng.”

Bonang Matheba, David Tlale, DJ Dimplez and Da Les at a Cîroc event. PHOTO: Steven Tanchel

Breaking new ground

Retailers and developers have responded to the massive demand for luxury goods in droves. Later this year, Sandton City will unveil its new Diamond Walk, a high-end thoroughfare between the mall and the ­

five-star Sandton Sun Hotel, to cater for exclusive and luxury brands.

Sandton City is one of Africa’s premium shopping destinations and is situated on some of the most expensive real estate on the continent. It’s not yet known just how much the Diamond Walk development will cost, but previous projects offer some big-figure hints.

Last year, Business Day reported that Liberty Group and Pareto (the owners of the Sandton City shopping centre) were spending R450?million to redevelop the 10-storey Twin Towers office complex, which was scheduled to add another 26?000m² of premium office space to the Sandton market on completion in the second half of last year.

This followed the R1.77?billion extension of the mall two years ago, which added 69 stores (30?000m²) to Sandton City’s retail offering.

Armand de Brignac Champagne is more commonly known as Ace of Spades because of the decoration on the bottle

On to the next one

In 2009, rapper and businessman Jay Z announced on his hit song On To The Next One: “I used to drink Cristal, them motherfuckers racist, so I switched gold bottles to that [Ace of] Spade shit.”

His was one of many calls for people to boycott Cristal Champagne after its owners made racist comments that enraged the powerful – and vocal – hip-hop community.

Until Jay Z and Diddy led the charge to kick Cristal to the kerb, it had been the Mercedes-Benz or Gucci of the Champagne world. It currently costs between $300 and $500 a bottle. Jay Z mentioned the brand in more than 60 of his songs.

But his about-turn helped Ace of Spaces quickly claim prime real estate in one of the world’s most influential genres.

Then came November 2014 and Sean Carter Holdings, owned by Jay Z, acquired the Ace of Spades Champagne brand.

Loparco says: “Being bought by Jay Z has been very important for the brand. People want the product and want to be part of it.”

Bottles of Ace of Spades now show up courtside at basketball games and events hosted by Jay Z and wife Beyoncé – a couple who epitomise black excellence.

In September 2012, Jay Z and Beyoncé held a fundraiser for President Barack Obama at Jay Z’s 40/40 Club in Manhattan. Inside the club stood a tower of 350 bottles of Ace of Spades worth an estimated $280?000 – the kind of advertising you simply can’t buy.

Understanding the power of young black celebrities and professionals, Ace of Spades last year sent personalised bottles of their luxe drink to a handful of local celebs, among them media personalities Bonang Matheba and Tbo Touch. International brands understand that to get the buy-in of local markets, they either need to speak like them or associate with people and events that speak to their target market.

This explains the recent push by Cîroc vodka (owned by rap mogul Diddy), which has formed Cîroc Circles in South Africa and Nigeria. These consist of local personalities and individuals who epitomise what the vodka wants to stand for: “You’ve made it.”

We’ve seen Oude Meester bring Idris Elba to South Africa and make him speak dodgy isiZulu with Siyabonga Radebe in an ad. Oscar-winning actor Jamie Foxx also did an ad for the brandy. We’ve had rapper Nas sell us Hennessy and now David Tlale and Bonang Matheba are selling you the Cîroc life.

Ace of Spades competitor Moët & Chandon last year launched its global “Success is a matter of style” campaign in Nigeria to introduce its Nectar Imperial Rosé Champagne. This was a timely response to the news that, in 2013, seven Nigerian branches of South African retailer Shoprite Checkers sold more Moët & Chandon champagne than its 600 South African stores combined.

At least 500 cases, or 3?000 bottles, of Ace of Spades Champagne were sold in Nigeria alone in 2014.

“The market is huge,” says Loparco. “I mean, if you think we are selling one bottle for R3?700 and people are willing to pay top dollar for the Champagne?...”

Euromonitor, in its February 2015 report, says: “The luxury goods market in South Africa is still highly niche in terms of volume sales as well as the level of retailer concentration relative to other markets.”

In short? Hang on to your Champagne glasses, because the good times will keep on rolling.

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