South African wines have done a great deal of what was asked of them by the UK and other markets and are now looking to step up a gear to fight for a share of the more lucrative super premium sector above £5. Arnold Kirkby looks at this and the only cloud blotting a perfect skyline – a strong Rand.
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A dynamic Wines of South Africa (WOSA) marketing strategy has been formulated over the past four years and it is launching its latest UK initiative during September and October. It will continue next April with the Cape Wine 2004 biennial show in Cape Town.
The latest year-on-year WOSA figures, ending 30 June 2003, show South African sales to the UK topped 96 million litres, which has helped promote the country to fourth spot in the off-trade stakes.
These figures are expected to receive a major boost with the new autumn drive. It is a multi-faceted £1m marketing campaign, financed by funds from the Common Customs Tariff (CCT) exemptions negotiated between South Africa and the EU nearly two years ago.
For the first time ever, simultaneous promotions involving the 14 largest UK supermarket chains and multiples have been planned, all using a common theme, “Explore a Different World”. Around this, each chain has developed its own national strategy to highlight the campaign.
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By GlobalDataWOSA CEO, Su Birch, said it was being backed by a media campaign in leading national newspapers and key magazines, highlighting the quality of the wines from the Cape. A strategic link through the entire campaign was to underline South Africa’s ability to make large volumes of wines at £5 and above.
She also pointed out that there was a need for South African wines to make their mark in the on-trade, where vast opportunities were still to be found particularly in the higher priced spectrum.
“This is the most exciting campaign to happen to South African wine since Nelson Mandela was released,” she said.
Birch was upbeat about wines from the foot of Africa being able to reach volumes of 500,000 cases of wine above £5 by 2005, from the 140,000 cases a year being sold at present.
She attributed this to the fact that the majority of winemakers had taken to heart the advice of the market place and were willing to change the export profile of Cape wines accordingly.
Though many people agreed it sounded like a cliché, over-delivery had also become a priority by serious exporters, who realised the importance of rectifying the initial low value image projected when South Africa re-entered the international market place a decade ago.
It started with a major rethink by the industry, which resulted in major plantings of noble red wine varietals and winemakers concentrating on specific white wines such as Chardonnay and Sauvignon Blanc.
In the last three years the number of hectares under vine has grown from 105,566 to 107,998 hectares, while the red to white wine ratio changed from 84.3% white and only 15.7% red in 1990 to 61% and 39% respectively at the end of 2002.
Preliminary worldwide export figures for natural wine released by South African Wine Industry Information & Systems (SAWIS) from August 2002 to July 2003 show that of the 211.5m litres of wine, 105.6m litres were white and 100.4m litres were red. Rosé and blanc de noir wines made up the balance. (These figures have historically been adjusted upwards in the final analysis).
It was also significant to note that of the total exports there was a marked increase in the amount of bottled wine being exported. Bottled wines increased by 15% to more than 151.3m litres, while bulk wine exports declined by 5.5%, to a fraction over 60m litres.
The vast majority of exporters at the Cape were excited at the challenges which lay ahead and saw the strengthening of the Rand against most of the major currencies as something they had to overcome.
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Johann Krige from Kanonkop Estate, Charles Back of Fairview and Peter Hafner, marketing manager, global wines at Distell shared the opinion that while the exchange rate could not be ignored, wines were judged on their quality and fought in the appropriate price ranges.
“We have to become very cost-conscious in everything we do and it will help us both now and make us more competitive in the long-term,” said Krige, whose top wines are on allocation.
“We must also look at diversifying and ensuring that our wines are not concentrated in one market,” he said.
The ever optimistic Back said South African wines had actually enjoyed ten glorious years since re-entry to the international market and the strengthening of the Rand would help with the re-alignment of South African wines particularly in markets such as the UK.
“We have to continually improve our wines, to strive to fight in higher price points, including seriously breaking into the on consumption (on-trade) sector.
“We know we must be innovative to overcome these challenges. We must continue to project the positive quality of our wines, together with the natural beauty we have at the Cape, until consumers realise that we make good quality wines and are willing to take out a tenner or more for it, ” said Back
Hafner said a long-term view had to be made about currency fluctuations, a value proposition taken on wines entered into a market where they had to find their niche irrespective of currency valuations.
All, however, reflected the positive attitude taken by the majority of Cape exporters that hard work would result in the country’s wines reaching their goal of producing good value wines above £5.
