Kobrand Corporation

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Kobrand Corporation

134 East 40th Street
New York, New York 10016
U.S.A.
Telephone: (212) 490-9300
Fax: (212) 867-7916
Web site: http://www.kobrandwine.com

Private Company
Founded: 1944
Employees: 200
Sales: $116.8 million (2004 est.)
NAIC: 424820 Wine and Distilled Alcoholic Beverage Merchant Wholesalers

Based in a Midtown Manhattan townhouse in New York City, Kobrand Corporation is a privately owned marketer of wines and spirits that serves as the exclusive agent for many fine European wines. In addition, the firm owns many of the brands in its portfolio. Kobrand's wine offerings includes products from California, France, Hungary, Italy, New Zealand, Portugal, and Spain. Spirits include Alize, made from passion fruit, vodka, and cognac; Café Boheme, a French vodka and coffee liqueur; the Delamain line of cognac; Guyot fruit liqueurs; Larressingle armagnac, similar to cognac; and Depax Blue Cane Amber Rhum, a premium rum. Kobrand is owned by the three daughters of the firm's founder, Rudolph C. Kopf.

POST-PROHIBITION ROOTS

Kopf was born in the borough of Queens in New York City and graduated from the University of Columbia's Business School in 1927. At the time, the United States was still engaged in what many called the "great experiment," the prohibition on the consumption of any alcoholic beverage. Already proven to be a dismal failure, Prohibition would not be repealed until President Franklin Roosevelt took office in 1933. It was in that year that Kopf started a wine and spirits department at New York's famed Macy's department store. Under his guidance, it became known as one of the best shops in the country and Kopf established himself as an industry force. In 1944, at the age of 38, he struck out on his own and formed his own wine and spirits marketing company, which he called the Kobrand Corporation. He set up shop in the Empire State Building, a stone's throw from Macy's. Although light on money, Kopf was well connected, having established relationships in the wine and spirits business around the world.

Kopf's big break came in 1945 when he lined up his first major wine brand to represent, Maison Louis Jadot, which was established in France in 1859. Kopf flew across the Atlantic to make a personal appeal to Louis Auguste Jadot, the third generation owner of the Burgundy vineyard that was well regarded for the wines it produced. The two men already knew one another because Kopf had once arranged to sell some of Jadot's wine under a private label for Macy's. Kopf reportedly told Jadot when they met, "I have little money. But I have courage." Jadot was won over, granted U.S. marketing rights to Kobrand and established a relationship that would extend to the next generations of both families.

With the Jadot business in hand, Kopf's next notable achievement was landing a spirits brand: Beefeater Gin. Little known outside of England, Beefeater Gin was a favorite before-dinner drink of Kopf. He liked it well enough to secure the importing rights in 1946. Kopf then worked to make it a highly successful brand in the United States. It soon numbered among the top-20-selling brands of spirits each year. Beefeater became a reliable source of income for Kobrand for almost 40 years. A third key brand acquisition in another important category, champagne, took place shortly after the Beefeater deal, when Kopf secured the marketing rights to Taittinger Champagne, whose heritage reached back to the 1730s.

With the Jadot, Beefeater, and Taittinger brands anchoring the portfolio, Kobrand enjoyed steady growth for the next 20 years. It was prosperous enough that in 1965 Kopf was able to acquire a five-story townhouse on 40th Street on Manhattan's east side to relocate Kobrand's headquarters. In wines, the firm focused on French brands until 1978, when it began to market the Italian wines of Michele Chiarlo in the United States. Kopf's relationship with Jadot in the meantime remained strong, even after Louis Jadot died in 1962 at the age of 62. Kopf worked with Jadot's successor, Andre Gagey, who was put in charge of the winery until Jadot's 20-year-old son and only child, Louis-Alain, was ready to assume control. Unfortunately, the young man died in an auto accident at the age of 23, and because neither Jadot's widow nor his four daughters were interested in running the business, Gagey remained in charge.

KOPF ACQUIRES FRENCH WINERY: 1985

Gagey was over 60 years of age when Kopf inquired about the future at Jardot in the early 1980s, and broached the possibility of buying the business for his three daughters: Patricia Colagiuri, Sue Mueller, and Brenda Helies. The Jardot family agreed to the offer, but because it would be the first time that foreigners acquired a Burgundian winery the deal needed government approval. The sale finally closed in January 1985, and while ownership changed hands, Gagey remained in charge of the business and, after gaining permission from Kopf, groomed his son to succeed him. Kopf would not live to see the young man join Jadot, however. In 1985 Kopf died at the age of 80, only a few months after the Jadot deal was completed. His three daughters shared in the ownership of Kobrand.

Also in 1985 Kobrand acquired its first stake in a California company, Napa Valley's Sequoia Grove Vineyards. A year later, Kobrand turned its attention to Northern California's Sonoma County, forming a joint venture with Taittinger called Domaine Carneros to establish a new winery, the first in the Carneros district to focus exclusively on the premium sparkling wine category. Kobrand added further to its California interests in 1987 when it reached a marketing agreement with Cakebread Cellars, a Napa Valley winery started by former photographer Jack Cakebread in 1973.

Aside from the fine wine category, in 1986 Kobrand introduced Alize, a blend of cognac and passion fruit juices new to the U.S. market. The following year Kobrand gained the exclusive rights to market the port products of Portugal's venerable Taylor, Fladgate & Yeatman, S.A., whose heritage dated to the 1690s. The year 1987 also marked the end of the relationship with Beefeater Gin. The brand was sold and a new firm, Buckingham Wile Co. assumed marketing chores at the start of 1988. The loss of Beefeater, which had U.S. sales in the $60 million range, was a blow to Kobrand, but the firm countered by continuing to build its portfolio of wine and spirit brands.

In 1988 Kobrand added another major port producer, Fonseca-Guimaraens, established in Portugal in 1822. Also in that year, Kobrand began representing Sonoma Valley's St. Francis Vineyards, a winery established in 1979 that had established a reputation for its Merlots and other fine wines. Kobrand also turned its attention to a new country, Chile, which was beginning to gain a reputation for producing excellent wines. In 1989 Kobrand began importing wine from Vina Undurraga.

COMPANY PERSPECTIVES

Kobrand was founded on three cornerstones: quality of product, quality of people, and quality of relationships.

The late 1980s also brought some uneasiness to the Kobrand operation. The Kopf daughters were reportedly offered $148 million by United Kingdom-based Allied Lyons for Kobrand and the French American Vinters, the holding company for Jadot and the family's other French wine interests. According to Wine Spectator, "Longtime Kobrand and Jadot managers felt betrayed after rumors circulated that the sisters came very close to selling…. When news of the negotiations leaked, it annoyed the sisters so much, says Sue Mueller, that they broke off the talks." The sisters maintained that while they felt obligated to consider such a large offer, they were never serious about selling their interests. Indeed, after passing on a chance to sell the business, the sisters backed an ongoing expansion of Kobrand and the French American Vinters business.

Kobrand added to its portfolio on several fronts in the early 1990s. It acquired the rights to the cognacs produced by Delamain & Co., another French firm with deep roots, reaching back to the 1760s. In 1992 Kobrand tried a new approach in its French business, joining forces with the owners of Fortant de France to develop varietal wine in the South of France. Traditionally, the French believed that soil and climate combined to give a wine its unique character. To maintain the wine industry based on this philosophy, the French in 1935 passed what became known as the AOC laws, which covered almost all of France's most famous wines. These regulations set geographical limits on regions and vineyards, determined which grape varieties were permitted to be used in a region, established the minimum amount of alcohol in the wine, set the maximum yield permitted per hectare, and codified other traditional aspects of viticulture and vinification. Kobrand and its partner looked to a region of France not covered by the AOC laws because it had never produced excellent wine. They convinced small growers to replant with classic varietals and restrict their yields, and to follow other techniques to improve quality. From these grapes a number of new quality wines were produced and then marketed in the United States by Kobrand.

During this period, Kobrand was also building up its portfolio of Italian wines, a move that had begun in 1986 when the wines of Azienda Fratelli Pighin were added. In the late 1980s and early 1990s Kobrand added a host of brands, making the firm a major marketer of Italian wines. These labels included Sassicala, Ornellaia, Terriccio, Spalletti, and Chiehe Chiarlo.

Kobrand did not neglect its interest in California and French wines, however. In 1995 the firm landed an exclusive sales and marketing contract with Sonoma Valley's Benziger Family Winery, producer of award-winning wines since its founding in the early 1980s. Another important sales and marketing agreement followed in 1996 with the addition of Joseph Phelps Vineyards of Napa Valley to the fold. In 1997, Jadot acquired Chateau des Jacques of Moulin-a-Vent in the Beaujolais district of France. It included 67 acres of vineyards, dedicated to the growing of Gamay grapes, used in the making of Beaujolais wines. In 2001 Jadot added the 86-acre vineyard Chateau de Bellevue, located in the Morgon region of France. Kobrand also improved its portfolio of Italian wines in 2001, acquiring the rights to Vino Nobile di Montepulciano of Calvano, and the "Super Tuscan" lines of Cabreo and Sette Ponti.

Kobrand looked to other emerging wine countries as well. In 2001 the firm became the U.S. distributor of New Zealand's Craggy Ranger Winery. Established in the 1980s, the vineyards produced its first wines with the 1999 vintage. In 2002 Kobrand became involved in the Hungary wine business, acquiring an interest in G.I.A. Winery, founded in 1993 by international wine figure Tibor Gal, who was intent on proving that Hungary was capable of growing the kind of grapes that could produce quality wines. He introduced a wine brand that bore his name, which Kobrand introduced in the United States in 2004. Unfortunately, Gal died in a car crash in South Africa in February 2005.

KEY DATES

1944:: Rudolph C. Kopf founds Kobrand.
1965:: Kobrand moves into a Midtown Manhattan townhouse.
1978:: The firm imports its first Italian wines.
1985:: Kopf dies, after securing the company for his three daughters.
1988:: A marketing agreement with Beefeater Gin is severed after 40 years.
1995:: The firm begins distributing Benziger Family Winery products.
2004:: Blue Alize is introduced.

NEW CENTURY: POPULARITY OF COGNAC

Kobrand was also enjoying success in spirits in the late 1990s and into the new century. Although it had been selling Alize since 1986, the cognac-based drink benefitted from the rising popularity of cognac, especially among African-Americans. In the early 1990s the category was in trouble as cognac's consumers, generally white and wealthy, were growing older and dying off. On the other hand, cognac had always enjoyed niche appeal with African-Americans as a mixer with other spirits, and it gained popularity with hip-hop artists like Tupac Shakur, who made references in their songs to the most popular brands of cognac, such as Hennessy. Hip-Hop fans began drinking cognac as well, which led to a wider cultural appeal. Alize was a favorite of Shakur before his death from a drive-by shooting in 1996. His song, "Thug Passion," referred to his favorite drink, Alize Red Passion with Hennessy.

Taking advantage of the boost given to Alize by Shakur and other hip-hop artists, Kobrand introduced Alize Cognac, minus the fruit juices, in 2000. When the blue cocktail rage hit clubs and bars in the early 2000s, Kobrand in 2004 introduced Alize Bleu, a different combination of cognac, vodka, passion fruit, and other fruit juices. In addition to marketing to the hip-hop crowd, Kobrand's efforts naturally touched the urban market, which included a high percentage of gays and lesbians. Kobrand actively courted this market. It became the corporate sponsor of many popular gay and lesbian performers, many of whom incorporated the drink into their shows. In New York's hit drag show, "Kiki and Herb," for example, the Kiki character, lamenting the loss of youth and the monotony of breakfast, recounted, "I can't tell you how much better my life has been since I discovered passion fruit in the morning, ladies and gentlemen. There is nothing better than a little Alize to kick-start your day. Thank God I am not a diabetic." The line was both an inside joke the audience appreciated as well as a product pitch. Kobrand also used more traditional approaches to marketing Alize Bleu. In 2005 it began airing animated commercials featuring an animated character, "Lady in Bleu," which aired on cable television channels.

Kobrand became involved in a new spirit category in 2006: rum. Long regarded as a downscale product, rum had been making strides in recent years, especially in the premium category. Before the marketplace became cluttered, as was the case with premium vodka, a number of companies were rushing out high-end rum products to establish market share before the inevitable shakeout. Kobrand's bid was Depaz Blue Cane Amber Rhum, introduced in June 2006 at select outlets in New York City before making its way to other major cities.