The South African wine the industry has not been too successful in optimising tourism opportunities in recent years, although some individual players have had meaningful results. The opportunity for the industry is clear, but wine tourism will not achieve its full potential if treated as an ad hoc marketing event.
This was the crux of a paper delivered earlier this month by Prof STEPHANUS LOUBSER, at the International Wine Tourism Conference in Margaret River, Western Australia. Prof Loubser is associate director of international affairs at the University of Stellenbosch Business School.
Following his special report on the need for more marketing focus in the South African wine industry in our previous edition, he made this paper – titled The Role of Wine Tourism in Establishing a Successful South African Wine Industry – available to WineLand.
The other main points of his address were the following:
In reality, wine tourism is seen as a secondary activity, although the industry often talks about it as if it is its main strategic approach to driving the wine industry into the future.
The problem with wine tourism in South Africa, he said, was probably no different to that of other wine countries. For example:
- Winemakers are interested in cellar door sales, but the tourist is looking for a total experience. There is a general lack of understanding of tourism, marketing and service requirements.
- Looking at national tourism marketing activities, wine tourism is clearly not a priority; there are certainly some easier destinations to sell! There is also a lack of integration between the various role players in the tourism industry.
- Infrastructure is not well developed, ranging from the extravagant to nothing. The necessary investments are just not made.
- At local level, Government is also not considering wine tourism as a real priority, focusing their own growth strategies elsewhere.
- To invest in wine tourism is usually a leap of faith, rather than the result of carefully formulated strategies based on up-to-date information. Data is often not recorded, certainly not pooled and analysed, and market research efforts tend to be scattered. Yet, there are many examples of vast investments being made to attract tourists to wine estates and cellars.
- Wine tourism is the buzz word in the South African wine industry these days. It is seen by many as a relatively easy way of capturing the pockets of easy-going tourists and to stand out in the crowd. The reasons for this are obvious – wine sales and prices are under pressure in almost all markets, tourists are flooding to the Western Cape in their thousands, and competition is increasing everywhere with more and more new wine labels and quality improving all the time. Consequently, huge investments are being made in upgrading and/or creating new facilities, promotions, etc.
But is wine tourism really the solution for the current situation in the South African wine industry The Vision 2020 project indicated clearly that the fundamentals of the industry are not in place. The industry is still production-oriented; fragmented with thousands of producers each doing their own thing; inadequate human development on all levels; a tense relationship between Government and the industry; inadequate research and development and a focus on cultivars “not wanted” by the market, among others.
The global wine industry can be described as having either an exciting future or being an industry heading for a huge shake-up and decline.
Wine countries are looking at their futures and endeavour to formulate strategic visions and plans that will give them an advantage over others. Today French and Australian wines are in a battle for top honours and Australian, American and South African wines are dominating the top 20 brands sold in the UK. Not long ago the French controlled that market.
The wine countries have the following strategic plans in place:
- Australia: Strategy 2025: Provides specific targets for achieving a certain level of market share in the global market and what needs to be done to achieve that.
- USA: A development plan spanning 20 years, called Wine Vision.
- France: An industry strategic plan, New impulse for French wines for 2010.
- South Africa: Vision 2020, which in 2001 identified ten specific strategic guidelines for the industry, including its responsibility to build a transformed, democratic and vibrant South Africa.
- The South African wine industry has the ability to produce the quantity and quality of wine required by selected markets and although it is well positioned, consistency of supply and marketing ability lags behind that of the world leaders. The result is that while South African wines are known and appreciated throughout the world, they lack the image and positioning to really dominate any market of significance. Indeed, our wines are positioned at lower price points relative to similar wines from Australia. So, while South Africa is a significant producer of good quality wine, it is not really seen as a serious competitor in a global context.
The South African wine industry still has a co-operative culture, with little co-operation between the various role players. Consequently, the industry battles to accept/follow a single vision for the international market and for building a strong wine industry rather than only pockets of excellence. Tourism in general has blossomed in South Africa in recent years, especially since 9/11! There are indications that tourism will become one of the key industries in the South African economy in years to come. It is already the fastest growing industry.
Increasingly, individuals are recognising the need, as well as the potential benefit, of catering for tourists, within the context of export sales declining and local price pressures.
Clearly the South African wine industry is faced with a macro strategic transformation, rather than a micro marketing dilemma. The industry will not realise its full potential without addressing the issues outlined in Vision 2020. The recently established South African Wine and Brandy Company has as its mandate to implement Vision 2020. The biggest opportunity for the industry is probably to move from a production to a market orientation. Almost everyone in the industry readily supports this view, but the reality is that behavioural patterns are not changing. The industry is firmly entrenched in a production orientation!
Wine tourism is clearly not a strategic solution to the problems and challenge the South African wine industry is facing. Wine tourism can at best add value to conditions already in place. The purpose clearly cannot only be to sell more wine in the short term. If it is to create an ambience, a culture, a lifestyle, an experience, an image for South African wines, then there need to be some guidelines in this regard. Furthermore, a winery can very seldom attract the tourists and money on its own, but jointly a number of wineries can offer an alternative to other tourism destinations. The wine industry needs to play a meaningful role in defining and implementing the national tourism strategy, rather than relying on some mechanism to bring tourists to Cape Town and then hoping to encourage them to extend their visit to the winelands.
Wine tourism clearly is not a solution to the strategic problems and challenges facing the industry, but it can play a meaningful role in establishing “Brand South Africa”. This implies that South African wine will be of consistent high quality, reliable in supply when and where required in the quantities desired, and appeal on both rational and emotional customer and consumer fronts. Tourism can be a powerful strategy to add value to the wine industry, especially in South Africa which has seen tourism escalating rapidly in recent years. Within South Africa, Cape Town has become the most popular destination for tourists coming here. It is just obvious that players in the industry who are already suffering from a relatively poor international positioning of their wines and from the downside of a strengthening currency, will look at alternative marketing mechanisms.
If integrated as part of an industry strategy that is market focused, it has a large and meaningful role to play in establishing a very successful wine industry in South Africa. A holistic approach to a market orientation should be followed, while the industry attends to putting certain fundamentals in place as a matter of urgency. Wine tourism can play an important role in this process, but will come to nothing without these fundamentals being in place.
Significant tourism statistics:
- In 2002 (compared to 2001) 24% more tourists from the UK visited South Africa and 22% more from Germany (the largest sources of tourists to South Africa).
- In 2002, 6,42 million tourists visited South Africa, 1,8 million of them being from overseas and the rest from Africa.
- A total of 976 000 overseas tourists visited the Western Cape, the heart of the winelands.
- They spent a total of R17,3 billion (9,8% of gross regional product and 9,6% of workforce) and stayed for 12 million nights.
- The most popular attractions in the Western Cape are the V&A Waterfront in Cape Town, nature attractions like Table Mountain, the Stellenbosch Wine Route, and nature conservatories such as Robben Island.
- 57% of tourists came for holiday and 19% in a professional capacity.
- Statistics on wine tourism are fragmented into a large number of wine routes. It is not well developed although there are numerous examples of wine estates (for example Spier and Boschendal) who really understand what wine tourism is all about.