Words: António Freitas de Sousa
Just 55 years after its foundation in 1942, Sogrape, which already had a prominent position in international markets, decided the time had come to broaden its horizons and establish a physical presence in demarcated regions outside Portugal. With the traditional regions — Spain, France and Germany — massively congested with foreign investment, the Portuguese group, which at the time was headed by Salvador Guedes, decided to focus their attention on the new world and to concentrate in non-traditional continents.
The group chose Argentina through the acquisition of Finca Flichman, which had operations in the Mendoza region, at that time firmly established in the Americas market. That was in 1997, the same year Sogrape flexed its financial muscle by purchasing the Herdade do Peso in the Alentejo.
With vines stretching as far as the eye can see and bordered by the mountains down the western side of South America, the location was paradise, as Fernando da Cunha Guedes, CEO since 2015, recalled after spending some time learning the trade in here before returning to Europe.
Finca Flichman already had a long history behind it, marking it out as one of the best in the region. But Sogrape wanted more. During these decades in which Sogrape has owned this Argentinian asset, his team has carried out one of the most exciting reconversions in the wine world.
Generally speaking, Finca Flichman’s business model and profile as a wine producer has changed radically. The decision was the result of lots of hard thought, and there were many critics: from comfortably producing around one million bottles, Finca now only produces 400,000. This reduction of 60% would scare most people — but not Sogrape’s management which decided to focus on quality rather than quantity. At the same time, Sogrape decided the wines produced by Finca Flichman should be on the shelves of the best wine stores in the Americas, which was easier to put down as an item in the agenda for a business meeting than it was to bring about on the ground.
Clearly the increased quality demanded by this radical transformation could not consist simply of an additional adjective on the label or appear in the tasting notes sent to wine connoisseurs. The quality Sogrape demanded of Finca Flichman wines would be critical if the 400 boxes were to return a bigger profit for the company than the previous output.
And this is what happened. The road map for this radical change was the result of several decisions. The Finca Flichman brand changes were implemented immediately in the domestic and export markets. The four main wines in the Argentinian domestic market are Dedicado, Caballero de la Cepa, Misterio and Finca Flichman. Sogrape went on to launch new wines to break into new markets — paving the way for other names. The results are visible: in the United States, Paisage de Tupungato became the best seller in the important Total Wine & More network; at the same time, Dedicado, one of the group’s iconic labels, also made a strong impression in this market. In 2019, in the context of a joint venture between Finca Flichman and Evaton (the group’s North American distributor), the Flichman Reserva label was relaunched to appeal more to North American consumers. The quality of this wine was so good that it crossed the ocean and found its way into stores in the United Kingdom, where there is not much appetite for ‘so-so’ wines, bringing a relaunch of Caballero de la Cepa with it to dominate the British on-trade market.
Back in the Americas, Brazil is the second-most important market for Argentinian wine. There, Sogrape has established a robust distribution strategy that is key to Finca Flichman’s positioning among the most prestigious brands in a market where the import duties keep the market largely closed to European investment.
In a globalized market, as we shall see from this point on, China must be present in the financial portfolio. Sogrape decided to implement a local adaptation strategy that is more permeable to adjustments in the appearance of some wines. Mystery Authentic Malbec is an example of this.
Revenues ‘reflect’ this positioning: 70% of sales are generated in the export market, benefiting from a favourable exchange rate, with turnover increasing 25% in 2019 and a 35% increase forecast for 2020. Before the pandemic.
However, just like everywhere else, it is not all plain sailing at Finca Flichman. In Portugal, it is quite difficult to find any wines produced in the shadow of the Andes.
