Wine industry should be more assertive – outgoing WOSA Chairman Johann Krige

The SA wine industry has enough knowledge and insight in store to act more assertively – “even a bit more autocratically” – and to take something like generic marketing on the domestic front and run with it without going through all the usual rigmarole.

“We sometimes try to be too inclusive to accommodate everybody, and then get bogged down by people's own agendas" says Krige.

He was interviewed on handing over the reins* of the very hot seat as chairperson of Wines of South Africa (WOSA) after five years. And had some strong messages on the leadership and strategy required to take the industry forward – especially with regard to the critical need to accelerate transformation and move closer to the government.
In typically forthright fashion, Krige – owner of Kanonkop and among others vice-chairman of VinPro – expanded as follows:

Drive transformation or else …

We must bend over backwards to accommodate the government. If we do not succeed to drive transformation, it will be forced down on us. The sooner we drive transformation from within our own ranks, the better for us. Otherwise we’ll be sitting with another Zimbabwe situation tomorrow.
WOSA has experienced various phases of realities and challenges over my 28 years (and three months) on the board. In fact, the first part of this was in its previous form as the South African Wine and Spirit Exporters’ Association (Sawsea) – which had only five members, compared to the current WOSA membership of 680.
Yes we’ve come a long way and have had our share of criticism, often based on ignorance. But who would ever have thought that we’d reach the current more than half a million litres of wine exports mark? We currently have under vines some 2.5% of the world total and produce about 3.5% of the global volume, while exporting approximately some 7% of the world total; so we’re fighting way above our weight.

Windfalls before hard times

Before my chairmanship, there were the sanctions. Then the Mandela factor when everybody suddenly started exporting, without anyone actually farming more productively or effectively. It just fell into our laps and all went merrily (“lekker”).
The Mandela euphoria faded five years later but by the turn of the century the rand fell like hell to R19 a pound and things went even more lekker with the favourable exchange rates.
To my mind these two windfalls were not good for us; thing were too easy and everybody jumped on the bandwagon, often with inferior products.
Then, until about 2007 the rand steadily strengthened to R6 per dollar (today it’s around R10,50) and hard times ensued. At the same time we had the pressures to transform and empower and to give everyone a piece of the cake … SAWIT (the Wine Industry Trust) and WOSA were part of this, but it did not work, resulting in plenty of hardship and sorrow.
This was during the time of Dr Paul Clüver in the chair. I insisted that WOSA be restructured before my taking of tenure.
We needed to start with a clean slate and the constitution was rewritten to accommodate black exporters at board level. Today the five largest black exporters are entrenched in the board of 15 members (in its current form as WOSA since 1999).

Around the same table

My biggest challenge as chairman from 2009 was to be inclusive, get everybody around then same table and pull together – from the smallest to the largest exporters. The small ones always had the suspicion that the larger ones called the tune, which was not the case.
The large ones had to part of Brand SA, as they very much did their own thing. These fears had to be allayed. Today we are one big family – it’s quite a feat to have a bunch of farmers working together for their own benefit and also to the good of the whole industry. This has been a hallmark of WOSA in the past four years. No one is sitting there with his or her own agenda.
It took long for the exporters to realise that if Pete exports more, John would export more … and then Jane even more…
Today our export volumes are enormous, almost 550 million litres compared with 350 million litres on the domestic market. This is one of our big success stories. To think that we’d export more than sell locally was never on the cards 10, 15 or 20 years ago.

Bulk wine and flower power

Yes, the growing bulk proportion is distorting things. But the name of the game is being eco-friendly and it is more green to bottle at destination, Bulk export is a given and you’ll see about the same bulk proportion among our opposition, like Australia and Chile. This is a new trend determined by the market; nothing else … I see it continuing for many years.
The market for lower and medium-priced wines is here to stay. We all want to sell at higher prices, but the market is only so big. Our biggest challenge is to farm more productively and be market-driven.
We all talk about terroir-driven regions ... yes, I’m a terroirist. This is the challenge; to plant the right cultivars on the right soil types. We’re moving hopelessly too slow with this. You must stop planting Sauvignon Blanc because your mother-in-law likes it. It doesn’t work; those days are gone.

With regards to criticism about WOSA’s market focus on diversity linked to the country’s rich floral kingdom, it’s perhaps confusing the message. But it’s not a theme that can just fall away. The tourist spin-off in tourism because we’re supposedly selling flowers is enormous. So many people, so many opinions.
We are one of the most beautiful wine countries in the word and our wine tourism can still unlock enormous value. The modern tourist is much more focused on lifestyle rather than cathedrals; so wine tourism, which is closely linked to our biodiversity can be the right message for tourists to take home. It’s easier and more affordable to expose them to our locally than abroad. After all, we have a captive market here.

Thus, the whole diversity thing is not obsolete at all. Perhaps it needs a rethink, but it’s certainly one of the great legacies left by Su Birch (the previous CEO of WOSA). At the time it was innovative and smartly links with green farming and wine tourism,
To punt our position as the oldest of the New World wine countries as some suggest would not fly in the USA, for instance. They’ll laugh at you if you say we can be compared with France.

The USA and China challenges

Talking about the USA and WOSA’s effort there, it’s a complicated and problematic market, with no cultural links to South Africa. This unlike the traditional focus markets Europe and England, which actually follow behind the USA in terms in terms of budget allocation. At the same time Wosa is increasingly targeting the Chinese market.
People do not realise the Americans’ perception of South Africa in the Africa context. We are part of Africa and must accept this when trying to pitch high up in that lifestyle-oriented First World market.

I still believe the USA, including Canada, is potentially our most profitable market, but there’s a long walk ahead. lt’s not a fickle market and the systems are in place, but it’s long term and we have to learn to understand it. Large SA companies have failed there, even before sanctions were implemented.
Even if we double our total export promotion budget to R80 million it’s still a drop in the ocean. Unlike us, our competitors receive massive state support. We are dependent on statutory levies on exports and that would mean doubling the contributions. I am a proponent of considerably increased levies, but not many producers would accept this.

Seeking state support
The government must come to the party. There’s enormous goodwill within the industry and we must take hands with the state – which does not realise the value that can be added to Brand SA in addition to earning foreign currency. Each bottle of wine says ‘Product of South Africa’. This is not the case with an apple being sold in New York … it’s just an apple.
There are industry plans to move closer to the government, where we’re still seen as too white, too male and too Afrikaans. This may be so, but we’ve not received recognition for the tremendous progress and transformation of the past ten years. Neither for the goodwill and willingness to drive empowerment even more aggressively.

Resistance to change has been of our biggest problems. We’ve seen this in the Wieta debacle. We’ve had to kill many fires because of people who were too narrow-minded to see the strategic position of our industry in a global economic context and the realities of a new South Africa, but now Wieta membership has doubled in the past year. We are not going to escape the realities of our past in my lifetime.

Top leadership structure needed

It’s imperative to think strategically about the future and to create the structures to move closer to the government. I support the notion of a top structure for the industry, to communicate and co-ordinate internally and externally. It must just not become a political animal like the failed SA Wine and Brandy Company (2002) and SA Wine Industry Council (2006) – which were beset by political agendas.

This is receiving attention by certain wine industry organisations. Everyone is scared that such efforts would end up like what happened to the SAWBC. We must get the buy-in of the the wine industry organisations. It’s got nothing to do with peripherals and we must be autocratic if necessary to forge ahead.
The matter of domestic generic marketing is to be investigated by VinPro – a mandate just given by its board. Domestic marketing has nothing to do with Wosa. Its mandate is for export development, but if the funds are there and Wosa becomes the vehicle, so be it.

This will be tricky; the large players are not going to accept it easily. It’s all about unlocking enormous value potential …, enlarging the cake for all.
The car has been built. It’s not a Porsche or a Ferrari; to my mind it’s a Toyota. Now an inclusive wine industry together with Government should put it into 4X4 and get on with the job of winning the South African Wine Dakar. We have the people, the drivers and the wines!

* Michael Jordaan takes the reins

Johann Krige is being succeeded as Wosa Chairperson by Michael Jordaan, owner of Bartinney Private Wine Cellar, chairman of Mxit and former CEO of FNB. Dr Jordaan was unanimously chosen following intense lobbying among its leadership ranks. Krige’s vacancy on the Board as representative of the estate and private producers will be taken by Vergelegen MD Don Tooth, as a new entrant to its ranks.