By Matt Boswell, Corporate Financial Planner, Delegat’s Wine Estate
A bottle of wine represents a constantly-evolving process that spans numerous interconnected geographies, markets, and commercial livelihoods. As winemakers of repute, our expertise at Delegat’s Wine Estate lies in creating vintages that capture the elegant, cool climate characteristics that New Zealand wines have become renowned for.
As business people, we must match the quality of our wines with effective and adaptive process management throughout highly-competitive global markets. Maintaining excellence in both quality and strategy is the hallmark of any successful international business, and winemakers are no exception.
Having produced our first vintage in 1947, Delegat’s is now New Zealand’s largest listed wine company and produces the internationally-acclaimed Oyster Bayand Delegat’s wines. The past decade sawNew Zealand’s wine export revenues grow 500%, and in 2012 Delegat’s alone sold nearly two million cases of wine worldwide. Our entire winemaking process is managed in-house by 350 staff globally, from growing the grapes to producing, distributing and selling the wine with direct sales teams in each country.
As demand continues to increase in Asia, North America and other markets, our overall management systems need to maintain the cohesion and foresight which have sustained us thus far. Several years ago, we abandoned our spreadsheet-based forecast model – a relic from the days of our IPO – in favor of a system that could more accurately analyze and forecast outcomes based on detailed internal and market data. Working with IBM Business Partner Cortell NZ, we deployed an integrated planning and reporting tool based on IBM Cognos TM1 which would offer us comprehensive insight into present and future opportunities.
The results so far have been impressive. Since implementation, Delegat’s planning cycles have been shortened by up to six weeks. For example, with Cognos TM1 we’re able to analyze data from our vineyards to predict how any change in production will affect yield and overall supply versus our demand requirements. We have unprecedented insight into how decisions in one country – such as aggressive promotion of a better-known Chardonnay or lesser-known Merlot – will affect global supply balances, and overall profitability of our wines worldwide.
The analytics platform now takes after-sales volumes from our sales leaders, factors in viticulture inputs for grape variety, and translates future demand into hectares required from our viticulturists. This information enables us to make well-informed decisions on strategic vineyard and land buying opportunities. Improvements in decision-making have not been confined to internal processes: in September 2011, we used the platform to model our eventual acquisition of Oyster Bay Marlborough’s remaining shares; and expanded from owning ten vineyards to 15 based on “what-if” forecasts from Cognos TM1.
Predictive analytics quantifies what every winemaker instinctively understands: that change in any one area affects the entire vineyard-to-bottle process. The links between these different areas are complex and diffuse, but the deep data analysis of platforms like IBM’s Cognos TM1 can give us strong correlations and models upon which to base our decisions. We may not be able to entirely predict the future, but we can use data analysis predictions to answer the “what-if” questions that determine Delegat’s profitability and international standing, helping us become smarter winemakers and business leaders.