Friday, November 28, 2008

So what do paper and oil have in common?

Good question, I hear you ask - well, here's a clue..... it's to do with recession!

Now, I don't claim to be an expert in commodities (otherwise I would be making millions as a trader), but the thing that I do know, or have read, is that the price of certain products has collapsed in recent months. Of course we are all familiar with the story of oil - touching nearly $150 a barrel in the Spring of 2008, and losing two thirds of it's value since then, now trading for around $50. Quite rightly, the thing that always puzzles (and annoys) most consumers is the delay in any price drop reaching the pumps - needless to say the petroleum companies always have their excuses, sorry, explanations, to justify this.

So why would I mention this on a wine website? Allow me to explain:

In the last twelve months the prices of many of our dry goods (corks, capsule, bottles etc) have increased by much more than the rate of inflation, but none more so than our cardboard cartons. The reason is apparently down to supply, demand, and the price of re-cycled paper. As long ago as 2003 the price of paper started to rise sharply, brought about by the shortage of re-cycled material and the increasing demand from the booming Far Eastern markets. The Asians were quite simply willing to pay more for their paper.

However, this growth in demand has now beeen stopped in it's tracks by global recession - some parts of Europe that were exporting as much as 70% of their re-cycled paper to the Far East, now find themselves sitting on huge stockpiles, and the price has virtually collapsed.

Now, not many consumers will have noticed this as they are not directly affected in the same way as they are with fuel. I, on the other hand, took the first opportunity to confront my carton supplier....

Whilst he was obviously aware of the drop in paper prices, he was only able to offer a very feeble excuse as to why he was not reducing his tariff, and whilst he may feel that he was able to fob me off, rest assured he will not get off quite so lightly!

Thursday, November 20, 2008

Doing business in Spain

Now I don't often do this, and I may even get into trouble for doing it, but I am going to reproduce the text of an article written the other day in one of the UK's more serious newspapers. It simply highlights some of the idiosyncrasies and frustrations of doing business here in Spain, and could easily have been written by me (albeit that this version is much more succinct!) Unfortunately there are many painful truths.....

Spain is one of Europe’s great economic success stories; from low-wage backwater in the 1980s to modern global force today. However, do not be fooled by the shiny new wrapper: custom and tradition die hard in what is still an essentially conservative business society.

“Doing business in Spain is still more like negotiating in northern Africa than agreeing a deal in northern Europe,” says a British financier living in Madrid. “Si, Si often means no, no, and nothing gets done in a hurry.”

This lack or urgency may irritate those on a tight schedule. Spanish businessmen, particularly in multinational companies, are aware of this and will endeavour to adapt. However, government departments are indiscriminately bureaucratic and obstructive, despite regular promises by politicians to reduce red tape. In any case, it often pays to go with the flow.

Business meetings that may take 20 minutes in, say, Amsterdam, could drag on for an hour or more in Madrid. They can also seem a lot less structured, with participants appearing and disappearing with little explanation. Listening attentively, while a virtue in many societies, is optional in Spain.

“Be prepared for chaotic business negotiations,” advises the International Business Centre, a not-for-profit on-line advisory service. “Often numerous people will be speaking simultaneously.” Meetings are usually called or scheduled for late in the day, and run well into the evening.

Despite this relative chaos, business protocol and custom, though slowly dissolving in some sectors, is rigid. Attire is almost invariably sober and understated: dark suits, light shirts and conservative ties are the norm. One’s superior is always right and not to be contradicted, especially in front of others. Subordinates will often refer to a male chief executive as “Don” so-and-so, bestowing upon him a title best translated as “sir”.

Though foreigners are not expected to show the same deference, this treatment, on being introduced to the boss, will be appreciated. Use “Don” as part of a formal greeting, in Spanish, and your efforts will be noted. Simply effusing “Es un placer conocerle, Don Jaime”, or “Mucho gusto, Don Jaime” on shaking hands will unfailingly elicit compliments about the level of your Spanish. After that, first names are generally fine, though the occasional “Señor” followed by the surname will help maintain a basic level of formality. Get the surname right: Spaniards generally have two and, although customarily go by the first – which is the paternal one – they sometimes use the second. José Luis Rodríguez Zapatero, the prime minister, is a case in point.

Learning how to order a few favourite dishes in Spanish will also be a point-scorer. When there is business at hand, your host will generally insist on a three-course meal with wine, often prefaced with a beer and tapas and topped off with a post-prandial whisky or other spirit. These feasts rarely start before 2pm and can run to beyond 4pm, serving as a sort of long intermission in a commensurately long working day. Do not expect to find people in their offices during this time – Spaniards view with some disdain the idea of a quick sandwich at the desk.

Business is not necessarily the focus of what many would term a “working lunch”, but rather a way to get properly acquainted. “Ideally, you should talk shop at the table only if your Spanish companions initiate it,” advises “In any case, protocol requires that you wait until coffee is served at the end of the meal to bring up the subject of business.”

Avoid talk of politics until allegiances are established, and take note that Spaniards are sensitive to overt criticism of their country. “People in Spain – and other Latin societies – tend to confuse criticism of institutions with personal attacks,” says the head of an influential business lobby. This said, observations with a negative tinge are fine, although they are best offset with an equally unfavourable remark about one’s own country.

They also value family life above all else, so questions about your host’s family normally go down well. Football is another great leveller. Spaniards are also fiercely regional. The former chairman of one electricity group delighted in presenting to visitors a tome of photographs from his province. A few anecdotes about your own home will keep conversation flowing until talk finally gets around to business.

Monday, November 17, 2008

Avian vs Evian

Deciding to create a new brand is something that you do not take lightly, as quite naturally it comes to represent the image of your business. So back in 2002 when we decided to bottle different qualities of wine, we studied the market carefully to try to find something original, but above all else, easy to remember. (How many times have you tried to find a wine that you once enjoyed, but then couldn't remember the unpronounceable foreign name?) At the same time we also wanted to create a brand that was modern, vibrant, and perhaps more suited to wine bars and the off-trade.

After much deliberation we finally came up with Avian - short, simple and as far as we know, did not mean anything rude in another language (I still can't bring myself to buy the brand of sausage called 'Homo'!)

The next step was to register the name, assuming of course, that it was not already being used. In the product category of wines we discovered that it was indeed available, so we pushed ahead with the registration and started to sell the new wine.

After a little while we were astonished to hear that our registration was being contested..... by the French mineral water brand Evian. Now forgive me for saying, but I really fail to see how a Spanish white wine (named after birds) could possibly be confused with a French mineral water (named after a town).... but suffice to say, they put their lawyers on the case.

A couple of years down the road, and following appeal, they continued to fight, and as they had probably anticipated, we decided (reluctantly) that we did not have the time, energy or resources to carry on.

We will therefore now discontinue the Avian brand, and replace it with the new (and uncontested) label known as A2O - already a top selling wine in the UK market.

Now that's what I call a serious rip-off!

Monday, November 10, 2008

Soap box time!

It's been a little while since I posted anything on our blog, I guess that this is probably because I am going through my annual post-harvest depression, or perhaps it's simply that there's not much going on at the moment. So, as we await the first tasting of our 2008 wines, I thought I would fill the time by having a moan!

Now, anyone and everyone who lives in Spain will have his or her own horror story about working/dealing with Telefonica (Spain's largest telecom provider) , so my own recent experience will probably ring true with many - every pun intended.

Each summer we add a new ADSL connection to one of our existing telephone lines, and disconnect it in the autumn (no need for details). A simple exercise one would think, and indeed it used to be, but now the rules have been changed, surprisingly enough to the benefit of Telefonica. To connect is easy - a simple telephone call 'et voila' you have your new ADSL line within a matter of hours. Disconnection is however, another story, and this is where the rules have changed.

On previous occasions a simple fax confirming your desire to disconnect was enough, and subsequently your connection would be cut within a couple of days, but now..... The first step is a call to Telefonica who in turn send you the official disconnection form, by post! This, they remind you, can take up to 14 days - and guess what - it always does! Infact, after two weeks, when you have almost certainly not received anything, you are obliged to call them back so that they have to send you a second letter.

The first year when our letter 'went missing', we simply put this down to bad luck, but then, when it happened again a second time, we realised that it was simply a scam. Of course, by delaying the disconnection as long as possible the company benefits from the additional line rental. (By the way, I forgot to mention that Telefonica already has possibly the most expensive ISP charges in Europe, and whilst many European providers are reducing their fees in the face of stiff competition, Telefonica have just increased theirs!)

So why not move to another ISP? Well, to be honest Telefonica is simply the best of a bad bunch, and doesn't face too much serious competition.

In truth this small scam is simply the tip of the iceberg. Almost every month there is some small but mysterious charge that will appear on your phone bill - it may only be a few cents or an odd euro, but then imagine that this small 'mistake' appears on every customer's bill, multiply by a couple of million, and presto, how many cents will that add up to? Of course Telefonica make the assumption that only a handful of customers will take the time and trouble to complain - and the result of few people complaining?...... more profit in their end of year accounts!

One recent example of this - Telefonica suddenly started to bill for their 'caller ID' service, which had been offered without charge since it's inception a few years earlier. Fair enough, you may say - well, maybe not, as they will now simply charge you an additional fee should you decide to opt out of the service. I think this is known as a win, win situation, or perhaps put more simply, yet another creative way to fleece your customers.

Telefonica - Spain's favourite telecom supplier...... not!