Bulk wine is the forerunner of many bottled and boxed wines on the shelf. South Africa is a poor country with too much wine to pack, export and market and promote overseas. We simply don’t have the necessary capital.
In most countries wine exports are subsidised and promoted by their governments. This is not the case in South Africa. The so-called “quota” is so regulated and uncertain we can’t rely on it. To bottle or box, and sell or export your wine costs more than the wine itself. When it comes to lower-priced wine the manufacturers of carton, glass, paper and closures make more money than the wine producers so we export more packaging material than wine.
Compared with overseas countries, glass in South Africa is expensive. We basically have a glass monopoly in South Africa. When you export wine the shipping cost per container is the same for bulk and bottled wine, but with bulk you can fit in 24 000 litres compared with only about 10 000 litres with bottled wine. If you calculate the cost per litre, bottled wine is therefore more than double the cost of bulk wine.
SA wines have a very small space on the shelves in overseas countries and we’re often listed among “other” countries or producers or occupy the worst place on a shelf. The rand is too weak to be able to pay for marketing or a good place on the shelves.
By exporting bulk, South African producers can leverage the bigger overseas companies and bottlers to display the wines along with their other wines and to do sufficient marketing so they can achieve volume sales. All of this promotes Brand SA and increases our value. In the process, consumers are educated about South African wine and look for more wine and pay better prices for it. We have an excellent certification system that ensures quality wines are exported. This system calls for samples from bulk exported wines to be returned to SA for inspection and analysis, ensuring good practices and quality control.
Producers can currently immediately benefit from the worldwide shortage of wine through bulk exports and by getting better prices and earlier payments. None of this would be possible with wines exported in packaged form.
Christiaan Groenewald, New Cape Wines founder and owner-winemaker at Eagle’s Cliff Wines
You could easily argue the South African wine industry is on the brink of greatness. Born from a growing confidence, a relatively stable rand, a more readily recognisable identity and access to global markets, it should be an industry that’s flying high. But it’s not. South Africa’s wine industry is doing okay, but it’s not dramatically excelling. It’s outperforming some competitors, but it’s not achieving success and recognition in more than a handful of price-sensitive and uber-competitive markets. It’s generally falling flat when it comes to raising prices to match many of our mediocre competitors. We complain about a country discount, but what are we doing to correct this perception?
Take incremental steps my mom always taught me. A consistent ability and vigour applied judiciously to progressively move forward will win the day, she said. So where are we failing? This is a big topic and space is limited so I’ll focus on packaging. This is a relatively small but critical slice of the overall Brand SA product mix. Every bottle of South African wine exported is a poster advertising Brand SA. Packaging is a golden opportunity to advertise a premium image, project a hard-earned reputation for quality and frankly to make our wines look expensive even if they’re not.
So how does Brand SA fare in the packaging department? My immediate response is that our packaging supply industry is lagging behind the rest of the world. It’s not sufficiently challenged by producers and négociants to supply the kind of world-beating quality we as producers should be demanding. I don’t believe that even a minority of producers are conducting packaging benchmark exercises. Suppliers will react to demand but I’m hardly ever invited to presentations by suppliers to demonstrate a new world-beating packaging process to consider.
I concede there are some (mostly) high-end producers who are breaking from the status quo. There are many top producers who are pushing the boundaries and several prestigious design houses that are in fact challenging the packaging industry to raise their game. I salute you and hope your efforts will inspire others. I acknowledge your efforts and encourage you to push harder, ask even more pointed questions and demand results. We should always be improving, because our competitors are.
To the great producers of wine out there – stop, take a deep breath and ask yourself if you’re putting enough focus on the presentation of your blood, sweat and tears. Are you applying the same quality principles to your packaging as you do to your viticulture? Are you convinced your overall packaging accurately reflects your intent and represents the quality and image you’re trying to project? Is your packaging lifting or depressing your shelf price? Would an extra 50 cents spent on packaging per bottle increase your selling price by one rand?
Think about it: the future of the South African wine industry will be built on confidence and in the same way a new suit or pair of shoes can lift your spirits and give you confidence, a relook at your packaging could add bounce to our collective national bottomline. South African wine is great – but perhaps it’s time to dress up for the party.
Mike Ratcliffe, Managing director, Vilafonté and Warwick Wine Estate