The UK currently accounts for almost half the total volume sales of South African wine exports, but there is still plenty of room for growth there, at least according to said Mike Paul, MD of Western Wines.
Western Wines owns Kumala, South Africa's largest wine export brand and the sixth biggest SA brand in the UK after a blaze of publicity in recent years.
Cape wine exports to the UK passed the 75 million litre mark in 2001, a 30 per cent rise compared to the previous year, according to Wines of South Africa (WOSA) CEO, Su Birch. She said provisional figures for July and August 2002 indicated that sales had far exceeded forecasts and that a 25 per cent growth on the 2001 figures was expected for the year.
Most encouraging was the fact that South Africa now has four brands in the top 20 list of best retail sellers in the UK, with Namaqua (a bag-in-box brand produced by Vredendal Winery and distributed by Raisin Social) in 15th position, Arniston Bay in 18th (from Vinfruco) and Goiya (also produced by Vredendal Winery and distributed by Raisin Social) in 20th place, as well as Kumala in sixth place.
Paul, who addressing a marketing seminar for South Africa's wine producers hosted by WOSA in association with his company in Cape Town today, said: "The UK trade is highly receptive to new wines and actively seeks points of difference to generate ongoing interest among consumers in this fiercely competitive market. Whereas California is more focused on its domestic markets than it is on the UK, and Chile and Argentina do not enjoy close historic and cultural links with Britain, South Africa is in an ideal position to maximise its advantages.
"Close trading, tourist and cultural ties with UK, physical proximity to the market and discernibly South African brands give the country significant opportunities to exploit. This is provided a coherent industry-led strategy is developed to address the UK market."
Paul has substantial experience of the UK market after 10 years as head of the European division of Australian wine giant Southcorp and as MD of Percy Fox in the UK, the premium wine and spirit arm of UDV.
He urged the South African industry to learn from the success of the Australian wine industry that now ranks the second largest supplier to the UK after France. He said the first step in building the value of its wine exports to the UK would be to develop and communicate a strategy based on sound market research, while projecting a decisive sense of unity among producers.
"Although the Australian producers are perceived as working in close concert to promote Australian wines of origin, this is not always the case. Nevertheless, they present a united front to outsiders."
Paul highlighted the promotion of brands as paramount to future success. "Australia's largest producers have also shown an ability to link the high end and the mainstream sectors of the market by creating tiered or ladder brands, where each rung appeals to a specific market segment. South Africa producers should adopt a similar top-down approach, where the wines at the top rung of a brand impact positively on the image and reputation of the wines sold at its lower, more mainstream and populist rungs."
Paul said producers must treat wine as a business and start taking control of the destiny of their products, and not abdicate the responsibility of marketing, sales and distribution.
He called for local producers to develop brands that created a recognisable South African identity to accentuate their uniqueness and shift their focus from the mainstream to the higher end of the market to elevate the country's image as a wine producer.
Whereas the average price for South African wines for July 2001 to June 2002 was £3.48 (€5.5), the Australians achieved an average of £4.25, with the highest concentration of its wines sold in the £4.00 to £5.00 bracket. South Africa's highest concentration of sales was in the £3.00 to £4.00 bracket and it was still heavily represented in the segment below £3.00, he said.
Paul said that giving greater accent to blended wines, local winemakers would be better able to showcase their talents as opposed to relying on single varietals produced internationally.
Local producers, while thinking globally, should act locally by tailoring strategies for the specific countries or regions in which they traded.