Despite the export boom of recent years, South African wine producers are facing a longer-term problem – the international image of Brand South Africa is receiving little marketing or government investment. While the volume numbers tell an interesting story of competitively priced wines, as any brand builder will tell you, “trading up” and developing a market for value-added products is the name of the game.

Australia went through exactly the same about 20 years ago, and helped by the lack of competition from South Africa during the apartheid years, they certainly got a headstart. But, a combination of government assistance and the indomitable spirit of marketing guru Hazel Murphy was responsible for raising the profile of her country in key markets like the UK. So, it should come as no surprise that Australia is the volume and price leader in the UK market, showing a healthy average price of 4,40 pounds per bottle in the off-trade and still having a 21% share of the market.

Clearly, marketing needs investment, both by Government and producers if we’re to achieve the desired effect. South Africa’s 10% UK market share and modest, albeit growing, 3,68 pounds per bottle average price tag in the off-trade should be raising the red flag in front of the investment bull.

South Africa, with the help of Wines of South Africa (Wosa), last year committed to embark on such an exercise, sadly without support from the South African government. Paid for by importers of wine to the UK through the Common Customs Tariff (CCT) reallocation of import duty scheme, Wosa was able to allocate a budget of 1 million to their first promotion last year.

Richard Halstead, MD of UK-based market research company, Wine Intelligence Ltd, said while there was now more awareness of Brand South Africa than 12 months ago, the jury was still out on the effectiveness of the campaign and money that Wosa spent.

“There needs to be greater self-confidence to achieve these goals. At present, there seems to be a lack of both courage and self-confidence, and general criticism of the promotion,” he said.

Commenting on the effectiveness of the South African promotion, Halstead said although this was the first concerted promotion of SA wines in UK supermarkets, the efforts were not tailored to meet the needs of individual supermarkets. Some supermarkets had abused the money paid by Wosa and hadn’t promoted South African wines at all.

Sophie Waggett, Wosa Marketing Manager for the United Kingdom agreed, saying “compliance was patchy”.

“To be fair, we tried to rush the implementation of the strategy and that’s why it was not implemented correctly,” she added.

Halstead said, “One spend of 1 million will not achieve the desired result, but done continuously over years, it will.” Su Birch, Chief Executive of WOSA said in an interview the CCT project was “definitely worthwhile” despite it being a “ferociously complex year” with a huge amount of activity, and price-cutting from California and Australia. “What it did was allow us to keep our market share and increase our average selling price from 3,54 to 3,68 pounds – the first increase in two years.”

Birch said the CCT project would continue but that the amount allocated to this year’s promotion would be lower at about R800 000, because last year’s budget included amounts from the previous year.

She also confirmed that government had cut back its support for the wine industry exhibitions, which had impacted on all international marketing efforts. “The big differences are that we receive less exhibitor support at shows like London International Wine and Spirit Fair, and do not receive national pavilion status, which also has financial implications. Clearly government feels that we are a more mature industry than 10 years ago, so they don’t give us as much support anymore,” said Birch.

Government has provided WOSA with a paltry R500 000 for this year to promote SA wines internationally, which explains why the cost of exhibiting at London has climbed so sharply from around R6 000 two years ago for a small, single producer stand to this year’s R30 000. The lack of government commitment is also evidenced by the fact that nobody senior from either Trade and Investment South Africa or the Department of Agriculture attended Cape Wine 2004. Government also withdrew their support to fly foreign buyers in to the show.

While many South Africans will admit to a swelling of national pride at seeing London taxis painted in the colours of our flag, perhaps the adoption of a “rainmaker” policy – whereby the benefits will cascade out – would go further in encouraging wine industry sales and hence job-creation in associated industries as well.

Economists estimate that simply by pushing up the average price point of South African wine in the UK market from 3,68 to 4,00 pounds per bottle, it would increase SA revenues by approximately R360m.

Another market that South Africa has set its sights on is America, or the key markets where the most wine is consumed – Washington DC, the states of New York and New Jersey, Florida, California and cities of Boston and Chicago. But, again, there is little budget to achieve the raising of our image. While this has increased from R1 million in 2001 to R3,5 million or 0 000 this year, paid by WOSA from their funding, it comes on the back of SAWIT trimming their contribution.

By comparison, Argentinean wine producers, in conjunction with their government, have allocated a spend of million a year for the next four years to promote their wines in the US, and a further industry-funded millon over the following 16 years as part of their Strategic Plan 2020. And the objective To increase exports from current levels of 0m to over billion by 2020 – almost three-fold. Clearly South Africa is going to have to spend their funding a lot more innovatively in order to have a similar impact with such a small budget.

Says Birch, “There is already much better co-operation and working together for brand South Africa, but we have to have everybody pulling in the same direction first. It would be great if Government spent more money but it seems Government spends a lot more on making people proudly South African first.

Wine is the only product from SA that highlights sophistication. Even gold, if it is beneficiated, doesn’t scream South Africa to you on the label.”

But, image also relates to pricing and quality. According to Halstead, if perceptions of our wines are to improve, South Africa needs to break away from the very strict “every day low pricing” (EDLP) strategy that UK supermarkets apply.

“The fundamental thing is that South African brands need to get away from price as a motivating factor to purchase. Instead, you really need to influence opinion-formers like retailers and journalists,” he said.

With additional government investment, hopefully South Africa can continue to grow its export markets and especially those in the over 5,00 pounds a bottle bracket. Although these have increased from 154 000 cases in 2002 to 291 000 cases last year to the UK market alone, it seems that unless all roleplayers make the commitment to building Brand South Africa now, our future success will remain nothing more than a rich fantasy.

You may like to read these:

Go Back