What are the cost categories that are of major concern to wineries, regardless of their size?
Ramón Morte (RM): Irrespectively of wine purchasing, which is for those companies their very strategic raw material, they have other auxiliary materials such as glass, carboard, capsules, cork or caps, labels and more specific for some wineries such as the bag in box (as much a bag as a box). On another hand, transport, especially for export, and energy are significant cost categories. On a second level we can find categories such as insurance, social security (in the case of major wineries), among others.
How do you achieve savings in these categories – and with what measures?
RM: All projects start from scratch. Each of them is unique, with a bespoke approach. We analyse large volumes and we are able to find significant savings, not because we could get a high discount (because this is not our philosophy) but because of our knowledge of the market.
We know not only each supplier’s market, but also the market in general, in which direction it goes, how to deal with each supplier on the basis of what is important to them at every opportunity.
What average percentage of savings can you manage to achieve in these categories?
Carlos Aguilar (CA): It depends on the categories, but savings usually vary between 8% and 25%.
RM: Usually, for the packaging category we are talking about 8% to 20%. With transport you can certainly achieve significant savings, i.e. between 15% and 25%. Then with energy, savings are not so significant, but not negligible either.
CA: At the end of the day each project is specific and as such, meets the needs of each client and this is what defines savings.
Does the cost optimisation increase competitiveness for the Spanish wineries?
CA: Yes, obviously. The high level of competitiveness present in the industry worldwide leads them to analyse their expense accounts.
RM: We have positive cases, for international companies (more open to this type of investigation) as well as family businesses with a newly international outlook. Note that our savings go directly in the profit & loss, whereas if companies had to find the same amount to increase their turnover, they would need to have to increase sales hugely and in most cases, it would not be possible to manage.
CA: Not only increase sales but also improve the profit margins. For instance, big distributors are fighting a lot with the issue of price; in recent years, the price per liter of wine has dropped and it is necessary to find resources by other means.
In your experience of working with wineries, what can you say about what customers do with the savings achieved? Do they improve their facilities, increase promotional activities?
CA: For the growth. Savings are re-invested in the company.
RM: Some of the companies we see are in a delicate situation and they use the savings generated to strengthen their foundations. On another hand there are many who use the savings to enhance their growth.
How can Expense Reduction Analysts help wineries in the search for hidden savings?
Both: As experts, we bring an updated and in-depth knowledge of the market, categories, products and suppliers. The key to Expense Reduction Analysts’ success is base on knowing the needs of the clients to offer a range of alternative or better products and/or suppliers to enable the adjustment of expenditure. From there, you apply our methodology to the successful completion of the project, making sure there is always a direct agreement with the client.
As experts, what is your advice to businesses who think they can do the same on their own?
CA: The reality is what we are doing today. However our experience tells us that even in situations that are extremely competitive, we have savings lever that bring savings to light even when the company thought that the category was already optimised.
RM: Businesses have nothing to lose by trying us and giving us an opportunity; the fact that we work to ensure success is the guarantee that they can only win by working with Expense Reduction Analysts.
CA: I would say to companies in the sector that the truth is that only we can provide them with this type of support. Thanks to the trust given to us by customers in the wine industry, the demonstration has been made that we find hidden savings in categories so far well managed in-house.
About the experts
Ramón Morte has an extensive professional experience spanning over 20 years in positions at national and international levels within the Hero group. Since joining Expense Reduction Analysts in 2011, Ramon has conducted over 25 projects for the optimisation of packaging costs, obtaining average savings of 15% and managing expenditure budgets of over 45 million Euros in the sector of wineries, soft drinks and food, hygiene and household products, in addition to fully managing the development of the project with various clients.
Carlos Aguilar has 25 years’ experience in senior positions in companies such as Siemens or Smurfit Kappa among others. Thanks to his great expertise in all business areas, with international development in many different sectors, Carlos joined Expense Reduction Analysts in 2010 to help clients find hidden savings.