South African wines bear export fruit
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GOING UP Exports are driving the strong performance of the wine industry |
Wosa CEO Su Birch reports that the growth is being driven by the weakening rand and the commendable performance of South African wines in key export markets.
She adds that, although the final figures for the year have not been calculated, it is believed that exports will maintain momentum and finish up considerably higher then 2007’s figures. Last year, South Africa exported 309-million litres of wine to the international market.
Birch reports that a year ago, South African winemakers were working towards reclaiming lost ground after a slight dip in sales in 2006. The results of this reclamation is that international consumers have an extensive range of South African wines to choose from. Winemakers not only have FirstCape, Kumala and Namaqua within the UK’s top 20 retail sellers, but have other brands showing solid growth and across a growing price range. She adds that because of this, South Africa’s position is far stronger than it was in 2007.
She says that the response to the South African wine exhibits at the 2008 London Wine Trade Fair indicated continued broad-based trade support for the South African product.
“Wosa accentuated its competitive difference by using a series of regional stands, visually enhanced with maps to highlight South Africa’s varied regions and underscore its ‘variety is in our nature’ positioning. This approach, together with diverse representation from individual wineries, including new black-owned brands, helped to showcase the uniqueness of South African wines and the country’s ability to deliver quality and good value across a range of price points,” says Birch.
She confirms that reports of new business concluded by South African producers participating in this show have been very encouraging.
Sales to Germany were 24% up for the first nine months of 2008 compared with figures for a year ago. Growth in the German market has been strongest in exports of bulk wine, with many retailers electing to bottle the wine in Germany rather than in South Africa. Because of this, she says that Wosa is employing a range of initiatives to build awareness of its packaged offerings.
Reports from Germany indicate that South Africa is now one of the top international producers in this market. Nederburg and Golden Kaan are among the brand leaders in this market.
Birch reports that although there is significant interest in South African wines in Germany, the association is holding road-shows and trade exhibitions to increase South African wine-makers’ exposure in the market.
“South Africa’s showing at the recent ProWein and Südafrika Weinshow events in Germany attracted record crowds. These events gave traders and consu- mers the opportunity to engage with winemakers, an important tool in promoting brand equity. The winemakers also served to entrench a link with South Africa’s wine tourism, which is a valuable platform from which to push the country’s super-premium segment,” says Birch.
Reports show that other impor- tant markets where packaged wines recorded impressive growth between January 2008 and September 2008, included Denmark, which was up 25%, Canada, which was up 11% and Sweden which was up 13%.
Birch reports that although exports across packaged and bulk sales increased by 36% for the first nine months, this must be viewed in the context of reduced output and price reduction activity from a drought-stricken Australia. Local producers have been able to make the most of the opportunities created by this situation, as well as the weak rand.
She adds that the biggest international consumer of South African wines by volume is the UK.
Birch reports that, according to the latest data from independent market research company AC Nielsen, South Africa is the fastest-growing category in the UK off-trade wine market.
In the first period of 2008, South African export wines grew 13% by volume, against a total market growth of 1,1%. South African value sales also grew by 13%, demonstrating a strong and profitable performance from this category. South Africa’s current market share in the UK is 9,1%, by volume, and it is the fifth-largest export country in the UK market.
Wosa UK market manager Jo Mason says that it is satisfying to see South Africa performing so well in one of its most established export markets. “South Africa enjoys an enviable image in the minds of UK consumers and the quality and value for money the country offers are clearly having an effect. The more established South African brands have been successful this year. Kumala is back in growth, Namaqua and First Cape have delivered commendable results and Arniston Bay has also put in a strong performance. In addition, South African wines are selling more wines above the £5 a bottle mark. This is being driven by the fact that South Africa is being viewed as a producer of premium wines with distinctive regional characteristics,” says Mason.
Birch reports that the outlook for the South African wine industry will depend on how it responds to the current export success.
“The current boom is partly driven by a favourable exchange rate, so in that sense it is not sustainable. However, if the industry invests more in plantings, and brand building, its long-term success is assured,” says Birch.
She adds that South Africa is also leading the rest of the world in terms of sustainability and conservation. The South African wine industry currently has more than 1 ha of wineland in conservation for every 1 ha of vine.
“The South African wine industry also stands to benefit from growth in undis- covered markets as wine attracts new drinkers. Africa and China offer significant potential, while the main ambition of our industry is to break into the North American market,” says Birch.
Birch reports that the 2010 FIFA World Cup is an exciting event which the South African wine market is looking orward to.
“[The year] 2010 offers the industry an exciting opportunity in that millions of people who have barely heard of South Africa will be exposed to the wines and the wine farms. Local and inter- national wine sales will benefit from the visitors,” concludes Birch.