This month will see the launch of Château Ka, the latest recruit to the steadily growing roster of local wineries. Ka is the brainchild of Akram Kassatly, chairman of Kassatly Chtaura, the company that at various stages in its life has brought concentrated syrups, preserves and fruit juices to generations of Lebanese. His first wines will include 15,000 bottles of Blanc de Blancs, 15,000 rosés and 60,000 reds – called Source de Rouge. There are also plans for a “Château” level wine.
Six years of innovation
The wine initiative is the culmination of six dizzying years of successful innovation for Kassatly. In 2000, the company spotted the commercial potential in alcoholic ready-to-drink-beverages (RTDs) and within a year launched the multi-flavored Buzz, Lebanon’s own vodka-based RTD to rival Smirnoff Ice. Buzz was followed up a year later by Freez, a non-alcoholic RTD, which has become so successful in the GCC that it makes up nearly 70% of the company’s $15 million revenues. With Château Ka, Kassatly now has three high-profile brands.
The company spends around $500,000 a year, mainly on billboards, advertising Buzz and Freez. The aim is to gently push the Kassatly name into the background. “This way we can build our brands and make them more attractive to potential buyers,” explains Nayef Kassatly, Akram’s son and Kassatly’s Vice President.
So is the foray into wine merely another well-spotted opportunity, given the wine sector’s elevated profile in recent years? Nayef disagrees and explains that the move is rooted in a solid commitment. “Wine runs deep in my father’s veins. He always wanted to make wine. He studied enology in Dijon in the 60s.”
In fact, the building that houses the factory in Makse, just outside Chtaura, was originally a winery (the original concrete vats are still in place) but the war put those plans on hold. “We had made our first wine but a militia raided us, removed the caps from the vats and the wine leaked out. We were a family making alcohol in the Bekaa. It was a difficult period for us, so we went back to producing concentrated syrups.”
In 1982 the company began the first of its marketing brainwaves by putting jallab, until then a drink that could only be bought from street vendors, into bottles. This was followed up in 1983 by the production of a crème liqueur similar to Bailey’s Irish Cream. “We were taking the basis of an established international drink and giving a local name and a local brand,” says Nayef, who joined the company in 1994 and helped start the juice line as well as consolidate jams and pickles.
And that was how things chugged along until 1999, when Akram awakened his dormant dream of producing wine. “My father got his hands on a bottling machine from a bankrupt winery in Switzerland,” recalls Nayef. “I was sent with some technicians to dismantle it and ship it back to Lebanon.”
It was then that the wine dream was again sidetracked. “While in Switzerland, I learned that Smirnoff was launching Smirnoff Ice. I thought, ‘we should be doing this,’ and realized that we could use the bottling plant to make carbonated drinks, as it was originally used to produce sparkling wines.”
In June 2001, Kassatly bottled its first run of 25,000 cases of Buzz. With Smirnoff launching in Lebanon at the same time, Buzz was able to hitch a ride on the coattails of a global brand while offering a competitive alternative with a wider range of flavors. “It gave us it a good image,” explains Nayef. “We were able to undercut the local market by 20%. We could not go any lower, as that would have given a negative perception to the brand. You know what the Lebanese are like. If it’s too cheap, they aren’t interested.”
Buzz buzzed, and in 2002, the company upped production to 50,000 cases. But Kassatly still wasn’t getting the most out of its plant. Then came the masterstroke. “I was sitting with my Saudi associate,” says Nayef. “I asked if he would take a non-alcoholic Buzz, and he said, ‘Sure, why not?’ He wanted to call it Buzz non-alcoholic, but I wanted it to be a different product and I came up with Freez. We made two flavors, lemon and grenadine and I gave him I gave him 2,000 cases (48,000 bottles) as a trial batch. I put them on the lorry and they vanished.”
Today the company sells 40 million bottles. At least 75% or $11 million worth of both Freez and Buzz are exported. Freez has found a huge following, not only in Saudi Arabia, but also in the UAE, Kuwait, Qatar, Bahrain, Jordan and Syria, while Buzz has a loyal customer base in Syria, Jordan and Iraq.
The key to Freez’s success is that it lets the youth and young adults of the conservative Gulf States enjoy the image of being seen drinking an RDT while remaining true to their Islamic principles. “We are currently launching a limited edition Freez,” says Nayef, plonking a matte silver bottle on his desk. “We added volume and put it in a funky bottle. It has a sporty look, almost like a scuba tank. Red Bull was doing it and charging a premium. I felt we could too.”
Kassatly has not ignored Buzz. It recently launched Buzz Strong, which now accounts for 50% of Buzz sales, and this summer will launch the beefy Buzz Extra Strong (10% alcohol). According to Nayef Kassatly, Buzz is the king of the off-trade but cannot get a look-in at the bars, nightclubs and beaches. “We just don’t have the budgets the big distributors have to pay establishments a pouring fee. A supplier will pay a club to put its brand of whisky into a whisky and coke, for example, as well as telling them to take their RTDs and give them exclusivity. What we’ve learned is that people drink Buzz at home before going out and then buy one or two drinks at the bar.”
Building the winery
So we come full circle and back once again to wine. “The money was coming and it was time to reinvest,” says Nayef. The winery, set in the grounds of the Kassatly factory in Makse, took only six months to build at a cost of $1.5 million. Running costs will stretch to a further $500,000 annually.
Grapes were particularly expensive in the first year. Akram found that as a new producer he just couldn’t waltz in and place an order for 300 tons of premium grapes. “We were forced to pay top dollar, as much as $0.80 per kilo.” Within three years, Chateau Ka will harvest its own grapes. The company has planted 60 hectares just outside Baalbek.
At our next meeting, Nayef has begun introducing his wines to a few of Beirut’s most popular restaurants. He is confident that Kassatly’s established distribution network will be a considerable asset in introducing the wines into the local market. “But you know what is good about showing someone your wines? No one wants to talk about price in the same way they do with other products. It’s different.”