FOR SA to capitalise on the rising tide of international affirmation of the quality and originality of our premium wines, the industry needs to start taking some of its cues from the Old World.
Over the past 18 months, several leading critics have expressed their growing enthusiasm for our wines, calling SA the world’s most exciting wine-producing country with a thrilling selection of interesting, unusual, rule-breaking and excellent quality wines.
Currently, SA is one of only two countries showing growth in the retail channel in the very significant UK market (the other is Argentina), with year-on-year volumes for the 12 months to April up by 14%, and value up 16%, according to information and measurement company Nielsen.
While it may no longer be the world’s biggest wine market in terms of spend, the UK remains SA’s single biggest market. It is also one of the most influential for positioning premium brands and is often a harbinger of global trends. Wines that do well in the UK are noticed by the rest of the world.
The UK market of 26-million wine drinkers with an average per capita consumption of just below 26l/year, is dominated by a fiercely competitive supermarket environment where discounting is aggressive. Despite the power of this channel, there is also a vibrant specialty segment, fuelled by consumer interest in luxury and unusual wines.
Fortunately, it is not only in the supermarket sector where SA is growing. Increasingly, as critics highlight the innovative and refreshingly daring wines to emerge from this country, there is a stronger impetus for specialist retailers to carry our wines. This is a positive development. In the specialty trade channels, margins are not subject to the extreme pressures of supermarket retail. Specialty stockists and restaurants that appeal to wine hobbyists also create the scope to build SA’s reputation for quality and originality and to drive sales growth on a more sustainable basis, allowing producers to invest more in the long-term health of their brands.
Yet, before we are too easily lulled into complacency by our improved fortunes, it is worth noting that it is not only SA that is seeing improved sales. So are France, Italy and Spain, and the rising appetite for European wines is not limited to the UK. It is evident in other European markets too, notably in Germany and the Scandinavian bloc, where New World producers are suddenly finding their sales eclipsed. After favouring New World wines over many years for their bold, upfront and fruit-driven flavours, these consumers now want wines of greater elegance, variety and provenance.
And that is why we need to look to the Old World. Over the past 20 years, not just SA, but countries like Australia, New Zealand, the US, Chile and Argentina have had great success in making wine more accessible by simplifying their offerings. The wines are easier to appreciate and the information on the labels is more direct. It identifies variety and vintage, but in focusing on what is inside the bottle, the relevance of regional identity has been lost. We have forgotten to communicate a very important ingredient and that is regional provenance.
Say champagne, and it immediately conjures up an image and an idea for wine drinkers. It speaks of quality, sophistication and luxury. Say Rioja, and it will be associated with Spain’s top wine region and the source of berry-scented, barrel-aged red wines. Of course it is important to tell people clearly what they are drinking, so they know what to expect from the contents of the bottle, but don’t forget regional provenance when it can help to build reputation.
Valery Michaux, head of research at Neoma Business School in Reims, France, suggested in a recent book entitled Strategies for Wine Producing Territories and Clusters that winemakers in lesser-known regions can learn from the likes of Champagne, Bordeaux and Burgundy by following what she and her fellow writers call a "wine cluster effect". They are referring to like-minded producers, who in addition to promoting their individual businesses, employ a collective strategy to promote regional brand identity and awareness. In the process, they are continually raising the quality of their offerings and the reputation of the region.
The writers have taken the term "cluster" from the world of business, where the idea of a cluster effect is used to explain the success of start-ups from Silicon Valley. Michaux was quoted by The Drinks Business as saying: "The presence of strategic alliances between professionals contributes significantly to the development of a single territorial umbrella brand and thus its influence."
This is the lesson we can learn as an industry to build the regional reputations of Stellenbosch, the Swartland, Elgin, Constantia and others, turning them into differentiated centres of excellence, associated with a particular varietal, style or attitude. It means taking the next step from wine-route branding and adopting a collective decision to stand for something that wine lovers can readily grasp. So when people in Bristol or London pick up a bottle of wine from the shelf, their awareness of the region and the attributes it represents, will provide a very favourable and specific context in which to decide to buy the wine.
Regional emphasis will also provide a sturdier foundation from which to build our wine tourism, unleashing the enormous potential that lies waiting to be tapped. Our ability to offer visitors exciting wines, superb scenery and gastronomic pleasures, amid history, culture and interesting and exotic experiences from hiking and skydiving to vintage cars and coastal meandering is well known. However, we can still further emphasise regionality by giving visitors to our longer-established wineries, the opportunity to taste back vintages of flagship wines, allowing them to taste the effect of terroir, winemaker and history. Yes, we want to show off our new-generation winemaking, but let us also show that we know how to make collectable, enduring wines of impressive longevity that are reflective of their region.
At the same time as we drive regionality, we can more actively promote the enormous national competitive advantage we have in our sustainability seal, affixed to all wine of origin certified wines. Worldwide, consumers are taking far greater interest in how their purchases are produced and they want assurances of sustainable practices being employed. We have reason to be proud of our eco-leadership in winemaking and can amplify the fact that we provide a fully traceable guarantee of the production integrity of our wines.
Every sustainability seal carries a number that identifies the journey of our wines from soil to shelf, but we need to tell consumers so. The seal is being expanded to include a guarantee of social sustainability and ethical labour practices. Distell, for example, which accounts for well over one-third of SA’s wine production, has committed to ensuring that all suppliers for the company’s export markets adhere to the code of good conduct set out by the Wine and Agricultural Ethical Trade Initiative (Wieta), by the end of 2014, and all other suppliers by the end of 2017. Wieta accreditation is the foundation on which SA’s ethical seal is based. It is not possible to earn social sustainability accreditation without it.
To my knowledge, there is no other wine-producing country in the world that can provide its consumers with such eco and social sustainability assurances. But they will never know, if we rely only on the seal to tell the whole story. As producers, we have to make more of this remarkable competitive advantage. By augmenting the individual reputation of our wines, with greater awareness of regional and other specifically South African attributes, we can go a considerable way in strengthening the foundation of our premium wine industry for the long term.
Our job is not confined to exports, however. We very much need to build the scale and reach of our specialty wines in SA so they are recognised and desired as expressions of excellence in our own market too and where they serve as ambassadors for our industry and our country. If the Australians can succeed with Penfolds and the Chileans with Casillero del Diablo, there is no reason we can’t do the same. It is time for us to start believing in ourselves.
• Gous heads Distell’s recently formed Distell Vineyards & Estates.