Case in point

Tuesday, March 2nd, 2010

48 000 green bottles – that’s the difference between fourth and fifth spot in the January Nielsen rankings of wine exports to the United Kingdom. A scant 4 000 cases separated France and South Africa – and it meant that SA has been able to overtake France in the volume stakes for the first time. For the record, SA notched up sales of 12 270 000 nine litre cases of wine into the UK while France sold 12 266 000 cases. Still occupying the top three spots are Australia, the USA and Italy.

No wonder then that Wines of South Africa’s manager for the UK market, Jo Mason, described this as “a momentous occasion”. It’s made all the more remarkable when considered against the statistic that SA’s wine exports have grown from just 50 million litres in 1994 to 400 million in 2009. But it also means that the UK market accounts for around a quarter – or one in four bottles – of SA’s total wine exports.

The Minister of Finance Pravin Gordhan announced a rise in sin taxes in last week’s budget speech. In a nutshell, the state now earns R4.56 per bottle of wine while the producer earns just 44c. And the wine industry contributes R26 billion to the country’s GDP. So a little good news for producers is most welcome!

“In 1994 our producers wouldn’t have dreamt of selling more wine to the UK than France did,” said Mason, “but now the wine landscape has changed completely. UK consumers no longer default to European wine – and the quality of wine from South Africa is up there with the best in the world.”

There are enough reasons and explanations to keep market analysts busy for ages, much of it focussing on comparisons of French, Australian, New Zealand, Italian and American strategies such as cultivar labelling, simplicity of the offering, modernity versus tradition and even bottle price. But much of the credit has to be laid at the foot of South African wine farmers. They have heeded the lessons and made their product more relevant to the consumer. Charles Back, one of SA’s best marketers, attributed much of his success to the simple shoe leather philosophy. Put shoe leather on the pavement, get out there and see the buyers, sell your product – and your story – to them.

South African producers have learned a number of hard lessons – and done so quickly. Farmers have had to replant their vineyards with better material and switch to red rather than white grapes, winemakers have had to adapt their styles and learn what consumers want, marketers have had to listen to the consumers and buyers rather than dictate to them.

The opportunities have been there and all the hard work has been rewarded. However Mason warns that while the growth trend in volume and value is likely to continue to increase this year, much of it will be attributable to marketing efforts around the FIFA World Cup. “The huge growth we’ve seen in 2008 and 2009 is unlikely to be sustainable long term – South Africa doesn’t really have sufficient volumes to fulfil that.”

Many local wineries are feeling particularly bullish about prospects in the United States, believing that this market is untapped and that SA has a lot to offer American consumers. 2010 is going to be a big year in so many ways but one thing remains clear: it’s important for local producers not to rest on their laurels but to keep up their marketing efforts. International marketing visits to agents and clients are important while a simultaneous striving for continued quality improvements is essential.