History has its own momentum at Kjær & Sommerfeldt, Copenhagen’s oldest wine shop. Here is where the Danish court, the nobility and Nobel Prize-winner Niels Bohr came to buy Bordeaux wine, stored and bottled in the cellars below.
Charles Christian Kjær and Wilhelm Ferdinand Sommerfeldt established the company in 1875; 25 years later, they received a royal warrant, as wine merchant to the King. Their fine little pocket-catalogue from 1903 lists a chateau-bottled Château Margaux for 5.00 DKK ($0.76), an 1893 Johannisberger for 6.00 DKK and a 1893 Steinberger Cabinet for 6.50 DKK. The shop where you could buy these popular wines is still there, now respectfully restored by the new owners.
Denmark’s traditional wine companies fell on hard times with the entry of the supermarkets in the 1970s, and most of them were bought by big companies. From 1973 to 2008, Kjær & Sommerfeldt had a succession of owners: Danish Carlsberg, Finnish Marli Group and Swedish V&S. Then in 2008, Mads Stensgaard, CEO of V&S Wine Denmark, made a management buyout, along with two external investors and key employees. Kjær & Sommerfeldt became a privately owned company once again, specialising in HoReCa sales.
Checkered past
It’s a cold winter’s day in Copenhagen, and Mads Stensgaard meets Meinigner’s at the entrance of the old shop. A fast walker, he is out of breath but only for a few seconds, and walks through the shop that has bottles displayed along the impressive floor-to-ceiling shelves. Taking the stairway, it’s on to the back of the building, where a modern office and computer land can be found, inside a room of normal height. These are the two worlds that Stensgaard is orchestrating, combining the reputation of a 140-year-old business with modern business theory; he himself is a mastermind of organisational management. The company has a flat organisation, as he believes in responsibility.
Stensgaard went to the University of Aarhus, Denmark’s second-largest city, where he studied finance and marketing. This meant leaving behind his ice hockey team to the north of Copenhagen. Fortunately, he was then asked to play on the national ice hockey team instead, which he did for four years. After his first job at a TV station, he entered the wine and spirits business in 1997 – by accident. Another elite sportsman – Peter Schaltz, many times world bridge champion and CEO of Carlsberg-owned Vingaarden – saw his potential and appointed him Seagram product manager for the Danish market.
In 1999, the Finnish Marli Group bought Vingaarden, with Stensgaard remaining responsible for the spirits division. Two years later the company faced yet another takeover, this time by Swedish V&S Group. Stensgaard became CEO of V&S Denmark in 2004; in 2007, his strategic advice to the V&S Group was to sell Kjær & Sommerfeldt. He argued that the wine shop was the only company in the Group that had kept its own name, and that it also had a complex business model that didn’t really fit the business.
Instead, Kjær & Sommerfeldt got a new owner: Pernod Ricard, who bought V&S Group in 2008. While telling the story, Stensgaard smiles and says he was struck by a mid-life crisis around the same time: “Either I should get a divorce or buy what I advised Pernod Ricard to sell – the bastard, Kjær& Sommerfeldt.”
After all, he had made his way to the top in no fewer than four major companies, and had realised that the closer you are to the top of a big organisation, the more removed you are from the reality of daily business. “With that in mind it was clear to me that it was time to make a career change,” he says. “I made up my mind, and told Pernod Ricard I would like to buy Kjær & Sommerfeldt. They agreed but made it clear to me that it would be on the best possible conditions for them and with no advantages for me.”
Although the negotiations went on for a year, Stensgaard became the CEO and owner of Kjær & Sommerfeldt on 1 November, 2008. He managed to buy the company with two investors, Henrik Pedersen and Niels Boel Sørensen. “We also offered all the employees shares in the company. They should all have the possibility of sitting there on the hot stove,” as he puts it. Only six went along but the rest were offered options under the same conditions over the next three years. Today, 14 employees are co-owners.
Stensgaard and his fellow travellers were now ready to take the old company into the twenty-first century. Unfortunately, the stove became unexpectedly hot when Lehman Brothers collapsed, precipitating the Global Financial Crisis. In one year, the company lost between 20% and 30% of its turnover. “It was tough,” Stensgaard recalls, “but we told each other that it is in time of crisis that the best people and the best strategies win. Now it was time for faith, energy and passion.”
The first year, the company lost 5m DKK ($769,455.00); in the second year, 2.5m DKK, and rumours began circulating that Kjær & Sommerfeldt was in difficulty. “I had to stand up and talk about being patient and convince everybody that we were doing all the right things. It just took longer than expected. The mentality was important: the best do not want to be on the losing side, they want to be where you have fire in your eyes,” says Stensgaard.
Fortunately, the company not only survived, but in the last three years it’s seen a 50% increase in turnover.
Change of strategy
”We have been through a generational change and dared to invest in difficult times. We have fine-tuned our logistical set-up, being fully in control of flows and processes. Part of our black figures on the bottom line is due to an effective and well-functioning supply chain,” says Stensgaard. He adds that working in the HoReCa segment involves a lot more than just bottles of wine. “We have to see it from the HoReCa point of view. It has to be a mutually beneficial partnership, and a partnership that also includes the end consumer. Our job is to consider how to sell better wine to the restaurants and cafés, and thereby giving the guests a good experience.”
One café owner, for example, may have an ambitious wine list showcasing 60 different wines, even though it might be much more profitable to have only 20 wines. Another owner may have the bare minimum on a wine list. It’s important to understand both ways of thinking. “Our job is also to provoke, contradict and challenge,” says Stensgaard. “I believe very much in sharing the positive story. For instance, the one about our sales adviser who has increased the earnings of a restaurant’s wine sales by 20%. Word spreads and others want us to do something similar for them. A story of success is also very valuable internally in the organisation.”
Strategy is key for Stensgaard, which he communicates to “hare height” (meaning: as high as a hare jumps, or as simply as possible). “You need the strategy to be part of the culture of the organisation; involve your employees,” he advises. “Focus not on what we don’t want, but on what we want, and tell the good stories of where we succeeded.” He adds that success breeds success and there’s no point spending time and energy on things that didn’t work. “We have been working with this as part of the company’s culture for now almost seven years, and it works.”
When he took over Kjær & Sommerfeldt in 2008, everybody got a personality test and each employee got a personal coach. His reasoning was that to succeed you have to understand yourself and relate successfully with others. According to the personality test, Kjær & Sommerfeldt is a birdcage populated by eagles, owls, parrots and pigeons, all of whom are different, but none of whom are more or less important than the other. On the contrary, their differences were a valuable asset for success. So what did the test show?
Stensgaard was the eagle “eating” the pigeons when they bored him, so he had to learn to be a little more laid back and also ask questions about children and family. For their part, the pigeons learnt that when the eyes of the eagle got shifty it was time to let the matter go. “This birdcage-setup has been a useful framework where you can react and develop without causing any harm,” Stensgaard concludes. Now, whenever new employees enter the door, they get a bird identity and perch in the cage.
Strategic management has been added to the company’s 140-year traditions, and misfits expelled. “We said goodbye to Treasury Wine – far too big for us – La Roche and Boisset.” Next, the company made a wish list with all the brands they wanted in their portfolio. “Domaine Hugel & Fils was the first wish come true. Then followed Peter Lehmann Wines, The Hess Collection Winery, Chateau Ste. Michelle and Louis Jadot. Now we have a portfolio of 1,400 wines and our aim is to be the best in the HoReCa segment.”
Stensgaard says there are no “quick wins”, but the restaurant sector is doing well in Copenhagen and is spreading to the rest of the country, so growth is predicted to be on the agenda for the coming years. Stensgaard’s mantra is either develop and grow, or phase out, because what’s in between those options is not fun. “We shall sit on the edge of the chair and not lean back,” he says. “We have to be hungry for more.”
