Last year growth of South African wine in the important UK market, outstripped all its competitors as it moved the fourth largest exporter to the country. CEO of Wines of South Africa Su Birch speaks about the united efforts in the country, which have built brands and helped meet the tough needs of the retail sector.
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South Africa was the fastest growing country in the UK retail sector in 2002. It moved up from sixth to fourth position in the UK retail wine sector and increased its share of this market in 2002 to 9.5% (2001:7.9%), according to AC Nielsen, said Wines of South Africa (WOSA) CEO Su Birch today.
“While the volume of retail wine sales in the UK grew 6%, South Africa achieved a 26% growth on 2001, outstripping Australia’s 23%. And for the first time the country had a brand listed in the top five wines retailed in the UK with Kumala at number four,” Birch said.
The UK is the fourth largest wine market in the world by value and its rapid growth is expected to continue, believe international researchers of global wine trends. It currently takes up over half South Africa’s bottled wine exports.
Commenting on South Africa’s continued success in the UK, Birch said the 27% increase in sales of bottled wine for 2002 – according to the SA Wine Industry and Information Systems – was a preliminary figure, since not all transactions had been documented and that actual growth would be higher. She added that far from saturating the UK market, WOSA was confident of South Africa not only increasing its volume share but also its value share of the market, currently standing at 9.1%. Producers were being encouraged to focus efforts on the £5 price category and above.
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By GlobalDataShe said AC Nielsen research had documented the growing popularity of wine in the UK, which was now competing head on with other alcoholic drinks. “The growth of wine brands, particularly from the New World, has impacted significantly on the alcoholic beverage market. Who could have predicted even five years ago that there would be six wines on the list of the UK’s top 20 drinks? This list includes beer, coolers, ciders and spirits.
“This emergent switch to wine as a beverage of choice offers tremendous growth potential in a market where South Africa is widely known as a producer of New World, fruit-driven and accessible wines. Moreover, the dramatic growth among Britons travelling to South Africa can only strengthen the marketing efforts of local wine producers,” she said.
Other markets reflecting robust growth were the Netherlands, where sales of bottled wines had risen 22% on 2001; Germany, where they had increased by 16%, and the US, where volumes had grown 31%. Exports had also grown significantly to Denmark (28%) and Finland (37%), and were back on track in Sweden, prompting WOSA to appoint a representative in the Scandinavian block at the beginning of this year.
The establishment of the SA Wine & Spirits Company last year, she said, was unifying the local wine industry, bringing producers, labour and marketers closer together in a common effort to build international competitiveness.
In addition, the change in the composition of the national vineyard, which was addressing the demand for red wines, would play a major role in growing the market, along with improved viticultural practices that were promoting quality standards. “We also have the added competitive advantage of producing virtually all our exports according to environmentally sustainable principles under the Integrated Production of Wine system and are acknowledged internationally as leaders in this field.
“At the same time, our logistics and capacity to service export markets are being improved.
“To counter the strengthening of the rand and the growing power of the supermarket chains which continue to consolidate on a multinational basis, producers are concentrating on brand building instead of discounting to build market share.
“They are also increasingly addressing the premium segment of the market, where country of origin and distinctive regional styles influence buying decisions and where margins are more flexible. Wines that lack distinction in terms of quality or positioning will not survive.”
Birch cautioned that the battleground would shift from the lower end of the market to the US$5 price point as the larger international producers began servicing a slightly higher price segment and the premium producers started pushing volumes to create an economy of scale.
“Price and margin risk at this price point will assume increasing importance,” she concluded.
