Anton Smuts from Robertson is the new chairman of VinPro, the organisation representing South Africa’s wine producers. WineGoggle went to have a drink and a chat with the new guy in the familiar old hot-seat.
Let’s not beat about the bush, it is about survival. And the only way the South African wine industry is going to survive is by once and for all finding ways to unlock value.
“Return on investment in the industry currently sits at 2%,” says Smuts. “Out of 3 600 current members, VinPro is losing around 100 a year as the South African vineyard is shrinking by 1 000ha annually. And the condition of a lot of our vineyards is deteriorating as farmers can’t afford proper maintenance programmes.”
This can only be turned around by ensuring that value is added to the current amount of money the producer is getting for his product, albeit grapes or wine.
“Traditionally VinPro has been responsible for assisting our members with matters strictly agricultural, such as viticulture, providing information and internal communication,” says Smuts. “But also being the ear of the industry, we have recognised a need from producers for information and advice as to how better market their products. They want to know where the opportunities lie in this regard, as well as which tools are best to use for marketing. Here VinPro is jumping in to help where we can, and will increase our efforts.”
The days of a grape farmer simply off-loading a few tons of grapes at the cellar, or a winery bottling a few hundred thousand units and waiting for someone to take it off their hands, are long gone.
“Today’s grape and wine producers have got to work to business principals, have to have intimate knowledge of all links in the production and consumer chain,” says Smuts. “This includes marketing savvy and awareness of the realities of the wine market. If there is one thing I want VinPro to be known as, it is as an organisation that ensures producers have all the tools needed to unlock value throughout the chain.”
The biggest problem is well-known: the piffly low prices that most South African wine realises on the local and international front. Only 20% of local wines sales achieve more than R45 per bottle. Local per capita consumption has risen from five to seven litres in the past six years, and sales on South Africa soil are climbing 8% per year. But it is all happening at the bottom-end. Bag-in-box, cheap-and-cheerful. Some 27 years after re-entering the international market, Brand South Africa is still not shaking its cheap image.
“We can talk about our international image being determined by political and other realities, but the major reason South Africa is not seen as a serious wine country is because too many players are dumping our wine onto the markets at ridiculously low prices,” says Smuts. “It is a double whammy for our industry: producers do not get a sustainable price for their wine and our image suffers at the same time. All in one.”
How to get out of this seemingly downward spiral?
“Since 2014 VinPro and other industry bodies have been implementing the strategic plan known as Wise (Wine Industry Strategic Exercise),” he says. “This entails deploying various work streams focussing on areas within the industry that need to improve the total value chain.”
“These include black economic empowerment, viticulture, cellar practices, plant material, marketing and technology. All this has been harnessed through VinPro establishing goals that it aims to realise in 2025 to measure Wise and its success.”
Goals include ensuring local wine sales surge from 2015’s figure of 330m litre to 430m in 2025. Land and water in black ownership has to reach 20% in 2025 – it is currently under 2%.
The ANC government has traditionally shown scant regard for the wine industry, which is seen as rich and white – and Western Cape. But the door is slowly opening, says Smuts.
“VinPro now has a permanent representative in Pretoria committed to communicating with government and getting an ear,” he says. “Here we have to let government know that as an industry we want to transform and want to embrace black economic empowerment. But for this to happen, more than will and desire are needed. Transformation requires money and an industry that is profitable.”