Twice Blessed

He continues to tell me that its name, that when translated, means ‘the terrain of the limits’, that it is from a mountainous area just outside Barcelona, and all the vines were planted “many, many years ago and were completely dry grown, meaning that they are not given any water. It is what we call bush-wines, which are wines made as naturally as possible. They make wine there that is so old-fashioned with great astringency of acidity and flavor – truly amazing! The maximum amount that I can get of their top quality wine is 300 bottles.”

“You go to the extent of making a trip to just get 300 bottles?” I ask. Although I’m aware that he is passionate about wine, I couldn’t imagine him making a long journey for just 300 bottles that he could probably order online. Clinton, after all, is a savvy wine merchant.

“Absolutely. I will sell 120 to 150 and will keep the rest. I would like to see how this wines evolves over the next decades. These are wines that can live forever.”

It bothers me that when Singapore is supposedly not in its best economic shape, Clinton is visibly buoyant. That we are sitting in Zafferano instead of his office at Hock Tong Bee Building because of a major retrofit. Is there something that he knows that I don’t?

“We have found out that the best time to plant the seeds is when the market is weak. You plant seeds that you can buy for half their normal price. Whatever we are doing now, we would have paid two times more for in the past.”

Spring Singapore has invited CornerStone Wines to embark on the Singapore Quality Award starting September. Companies that are invited must represent the status that they want other Singaporean companies to get to, Clinton explains. They should also have a regional presence, a strong potential for growth, “and you must have a crazy entrepreneur that is willing to be different and innovative”. This last one makes me shake my head as I look at Clinton from across the table.

“I always look at the glass to be half-full, rather than half-empty – it is a philosophy that the company has made its own. Now we are planting the seeds, just like my grandfather did too. It is all about the time – the time that you have to give to allow the seeds to grow and be harvested. In a family business you think on a rather long-term scale. Everything that we do, we do it with a mindset for the next generation. I have the duty of bringing the business to the next generation – as long as I keep remembering that, I will be able to do what is necessary.”

The Family Enterprise

The youngest of four siblings, Clinton helms CornerStone Wines, which grew out of the family business Hock Tong Bee (Private) Limited. A major trading and wholesale enterprise in Singapore, Hock Tong Bee was established by Clinton’s grandfather in 1938, making Clinton the third generation family member to run the business after his grandfather Ang Soo Seng and his father Aloysius.

In traditional Chinese families, the eldest son is groomed at a young age to take over the family business, but Clinton’s three elder siblings found their calling elsewhere. Clinton attributes his father’s decision to hand over the reins of the business to him to some very interesting ideas. When he showed an early and more than a passing interest in wines and spirits, his father concluded: “Since you like to drink wine, you might as well drink ours.”

Clinton does not discount that his willful and headstrong character had to do with his father’s decision as well. “If someone says no to me, I will find ways to change his mind.” When a doctor told him that he wouldn’t do well playing badminton given his flat feet, he persisted in proving him wrong, ending up excelling in the sport, and eventually landing a scholarship. “That taught me that the greatest pleasure in life is doing what other people say you couldn’t do.”

As children, Clinton and his siblings spent most of their school holidays doing chores at the store, folding boxes, packing things away, doing simple deliveries, and so on, but whenever the business did well, their parents would treat them to a real holiday. “That was my father’s way of exposing us to the business, of trying to build an inherited passion for it.”

In time his father’s associates came to recognize and acknowledge Clinton’s natural abilities and told the elder Mr. Ang that his youngest son would be the one to bring the flourishing family business to an even better place.

“I came to the realization early that my job was my real destiny. My grandmother gave us our Chinese names, each ending with a special character, such as ‘Jiang’ for river, ‘San’ for mountain, ‘Bao’ for treasure, and ‘Tuan’ for something to pass on. Mine was ‘Tuan’. I see that as my fate to grow the family business and hand it over to the next generation.”

A Wine for Every Dish

In 1997, Clinton decided to launch a wine that would be better suited to Asian cuisines. Interest in Asian food, besides the usual Japanese, was on the rise, with a handful of fine dining establishments serving their versions of ordinary as well as refined Asian food. That wine would be CornerStone. “Some people thought it was a crazy idea,” Clinton says, shaking his head with amusement.

But it didn’t last long before the initial and early success of CornerStone wines proved him right. “In 1997, we sold 12,000 bottles; today, we sell over 2,000,000 bottles in the whole region. CornerStone has not only evolved into a good wine, but it has also become our trading name and that of all our overseas subsidiaries.” In Singapore, however, they retained the distinguished business name Hock Tong Bee.

Encouraged by the success of CornerStone, the company launched other labels in succession, including Vino+, XII° (not to be mistaken with the specialty wine storage facility of Hock Tong Bee that is set at a perpetual 12°C) and, most recently, Cora, named for Clinton’s daughter. Cora marks a diversion of sorts for the company. “It is about a new generation of taste – a range of wines that are made quite differently from the ones sold by CornerStone, which are very classical.” As Cora and Cornerstone wines are different from each other, they appeal to different segments of the markets.

Clinton has launched wines that he created with specific dishes in mind: Chicken Rice, Beef Kway Teow, Black Pepper Crab. “To be honest the best drink to go with these foods is probably beer,” he admits candidly, “but when you have to make a wine to match these dishes, you do so.” It was about segmentation and customization, which is what the consumers demand today.

“Every bottle of CornerStone, Vino+, and Cora is my signature, which is the philosophy, the testament, and the commitment of our family. We drink these wines ourselves.” Today, ConerStone Wines has 28 different kinds of wines under the four umbrella brands, a range broad enough to cover the 28 most well known dishes in Asia. “We have the spread,” Clinton says proudly. “You can have all the wines you need for a full Asian buffet. An idea I’m saving for our 80th anniversary next year is to have a huge Asian buffet, with the buffet of all our wines.”

Keeping to the Family

Hock Tong Bee remains entirely in the hands of the family. With strong growth and presence in 28 countries around the world, it has naturally attracted the attention of large multinational companies offering synergistic investments. “At this point we don’t see the need for additional funding,” says Clinton. “We are open to work with a partner who can bring us from good to great—just not right now. Running 100 per cent of a 10-million-dollar business is tougher than running 51 per cent of a 500-million-dollar business.”

“We have a Christian family business. My siblings and I are all Christians, and there are things we do not venture into. We want to do business that is completely legal. There are gray areas in this business that we refuse get into, despite the profits that we stand to make.

“We also do not supply to karaoke bars and nightclubs, which would have been worth millions in turnover, for ethical and religious reasons. We have decided on a day trade policy and supply to restaurants, wine bars, country clubs, hotels, airlines, cruises and so on. Our growth may be limited by our philosophy as a Christian company, but we would rather build the business and have stable growth of 9 to 10 per cent every year, sleep well at night, and be accountable to God.”

Although his second brother initially joined the family business with Clinton, he stepped down after ten years to fulfill the higher calling of becoming a religious minister. Today, Clinton is the only member of the family in an executive role; his siblings are shareholders and members of the board with non-executive roles.

Clinton’s eldest niece has just turned 21, and the youngest member of the family is his daughter who is four-and-a-half. “That is our very wide age variance. The truth is when I look at the older children or the young adults in the family I realize that they do not seem to have the same passion for the family business as I do. Perhaps this is because they did not grow up spending with their holidays working in the company. They had their own lives early.”

Although he promises not to influence the career decisions of his nephews and nieces, he feels that his children will spend their holidays helping out in the company in whatever way they can. “I will pay them, of course, for the work they do. I think that is important so that they will have a totally different exposure to the business.

“I work everyday to work myself out of the job. I must have the mindset that the business should not rely on me. The company must be able to exist on its own and survive until the next champion and driver is ready – which may not be a member of our family.”

Business Realities

Having been in the business for two decades, Clinton has seen major shifts within the industry, and has effected corollary changes within the company.

“I joined the company with my brother in 1997 when we were facing tough times. The multinationals that we used to represent had mostly set up shop in Singapore and had taken the brands away from us. That flattened the process within the distribution system – taking away the agents and distributing their products themselves.”

Clinton accepted the reality of the industry, and decided that innovation would be the key to staying in place. “Firstly, my brother and I realized that the only way to succeed was to change our thinking about big brands and big volumes, and to start thinking instead about authentic wines that were family owned, wines that truly represented their environment. We changed our portfolio to represent wineries instead of multinationals.

“Secondly, we also knew that higher integration – including coming up with our own brand – would be necessary to strengthen the business. By running our own brands, we won’t encounter the risk of anyone taking them from us. We would be in control of our own destiny.” That was the start of CornerStone Wines.

“Thirdly, we knew that we needed to grow regionally. When I joined the business, we were present in Singapore and Malaysia. I grew the company with the support of my potential partners based on the lesson I learned from my grandmother. She told me once, ‘If you take a pair of chopsticks and try to break it, that would be easy. But if you take a bunch of chopsticks and try to break them, that would be very hard.’ Our idea was to bring together all family-owned distributors from around the region into a group. We went further and started joint ventures with all of them.”

Today, CornerStone Wines is highly integrated with import, export, wholesale, retail, and wine production businesses built into the company.

Innovating for Growth

Clinton’s father imported wines as an exclusive distributor, but Clinton and his brother, who was in the business for a decade, aimed to manufacture their own wines. When CornerStone Wines decided to produce its own range of wines, it did not begin with a plan to acquire vineyards. They invested instead in contract wine manufacturing.

“A joke in the wine business goes, ‘How do you make one million dollars in the wine business?” and the answer is, ‘You start with ten million dollars’. Every person who is semi-retired nurtures a dream of investing into a vineyard, making his own wine, living on the property, looking at it every day. However, it is not as simple.”

Vineyards are highly susceptible to changes in natural conditions, from the soil to the temperature, and the amount of rainfall and sunshine. With several factors that are beyond control at play, it is a high-risk investment that Clinton has decided to avoid.

CornerStone Wines buys the vines at select vineyards and applies its own winemaking techniques. Without the vineyards to tend to, it limits its exposure to risks. “We call it own design manufacturing (ODM),” Clinton explains, “we are involved in everything else, but we just don’t own the vineyards. We have good joint ventures with very good harvest.” CornerStone has established wine manufacturing joint ventures in Australia, New Zealand, France, Italy, Spain and Chile.

Besides supplying to traditional retailers, they went online in 1997 when online sales were not the huge profit churner they are now. “We used it not so much for sales, but for marketing. We updated our clients on the events we were hosting, and the latest wines we discovered. Today, it is one of our key revenue drivers.”

CornerStone Wines are served in nearly all major events in Singapore. “I cannot promise that our wines are on top of every category, but they will be among the top 3. This is because we make all the wines without any middlemen, and all of our products are very true to our philosophy and their nature.

The innovation continues. CornerStone has developed the capacity to make ice-wine – a rarity in their segment. “We make it with one of our joint-ventures, not in Canada, Germany, or Austria, but in New Zealand where ice-wine can be made from Chardonnay. In New Zealand, we are able to produce ice-wine that is aromatic, rich, and lush without the high sugar levels usually associated with the Austrian, German and Canadian varieties. So I call it my ‘diet ice-wine’.

Current Realities, Demands

Clinton is anticipating the next growth cycle to come very soon. “I’m quite certain about it; every time there is a down marker, people need a bit of a bump or catalytic motion that may bring the necessary boost. Being in the business for two decades has given him deep insights into how things work.

When he first joined the business, there were 20 distributors in the market; today, there are at least 500. Alongside that figure, other markers have also gone up: the number of wine drinkers, the knowledge of and passion for of wines, and the market transparency have all grown exponentially. “Today you can take any bottle of wine, take a picture of it with your phone, and you can obtain updated information on its price, ratings and so on. You can also find the vendors and compare their prices. The consumer has tremendous control. Vendors cannot bulldoze they way through anymore. And that is good.

“Today, it is about transparency, accountability, speed, first-movers advantage, and ‘the devil in the details’. The consumer is king. In the past, you only wanted to work with brands that were recognized. Today, you have to watch both brands and consumers very closely. You must bring in wines the consumers demand, and at the same time induce the demand by finding certain things. It is multifaceted – that is how you have to run your business today.”

In the past, when mid- to high-end wines were released at reasonable prices, we were able to sell 80 per cent of our allocation and keep the other 20 per cent. A lot of private individuals bought wines and stored them for years. They are starting to realize now that even if they drank a bottle of wine a day from their stock, they would still have way too many bottles left.

Today, the release prices have significantly risen, and some of these individuals approach us to buy back their wine. We do buy them back at a reasonable price, from other merchants as well, and then store them for the next cycle.

“This is the different element in our business that most of the other merchants, save a few, are not involved with yet because it requires high cash flow. It is an investment that can require millions of dollars. Currently our stock has a monetary value of over S$20million. This is measured at cost value, meaning that we haven’t even revalued it.

“The wine business moves in cycles that we must recognize. We used to be suppliers to our customers, but now, in some cases, our customers may be our suppliers. We work with this cycle and are very open about it. Wherever you have seen a peak in the past, there has also been a trough.”

Reading the Market

"If I knew how to read the market perfectly, trust me, I would have retired many years ago. My father taught us that, ‘if there is a dollar on the table, you make your 75 cents and leave 25 cents for the others to make. If you try to make 90 cents, you will likely lose more than you have gained’. It is always prudent, that when you reach 75 per cent, you let it go and leave it for others to make.”

Clinton emphasizes that the only constant in wines is that there will be less and less bottles of specific vintage wines left on the market. “If, say, there were 50,000 bottles of a 1990 wine produced, with every year of drinking the supply wine will decrease, but demand will still rise. There is no other way, until a level of full maturity is reached. Essentially supply decreases, while demand rises.

Wines are like art, or diamonds of a certain size, or any other collectible. They comprise important asset class, but what’s more important than that is timing, Clinton shares. “It’s all about the point in time that you choose to enter the market. You need to know how to time the market: When the market is weak, you need to buy. When the market is feverish, then you have reached the best time to sell. It is important to diversify. Actually wines that can be used as an investment are very similar all around the world. Commercial wines that are made for drinking daily differ greatly from the investment-grade wine.

“Personally, I invest in different asset classes that I don’t have to invest in on a constant basis. I look at a situation, wait for the right timing and when I think that it is 25 per cent from the market bottom, I will start to buy. Following that I will wait for the cycle to turn.”

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