State of SA Wine Industry Hits a New Gear

No other agriculture body gives such a good Information Day as VinPro. And I’ve been to some – from ostriches to rooibos tea, farmed salmon to prickly pears. This year the South African wine industry’s official voice and representing body once again packed the Cape Town Convention Centre to the rafters, some of the 1 000 plus attendees having had to leave their farms at 04:00 to make it through the infamous inbound rush-hour traffic.

And quite a show it was. VinPro chairman Anton Smuts fired the first volley, succinctly stating that nature (drought) and people (national government) are creating an industry in crisis.

The first, of which we would continue to hear about for the rest of the day, is self-explanatory as the absence of precipitation is going to cause the lightest grape harvest in over a decade. And government is not coming to the party or the assistance of the wine industry who, unlike their European and Antipodean counterparts, get scant support from the authorities. Oh, and government’s forked-tongues on land-distribution are contributing to the “abnormal” environment in which wine farmers must do business.

Rico Basson, CEO of VinPro made a comprehensively succinct presentation on the decline of the national vineyard – heading to 85 000h in five years’ time, down from 100 000ha a decade back. Also, due to the drought the “farm gate” – cool market-speak for industry income – is going to be down R700m this year due to the volume-sapping drought.

Rico Basson

But on other fields VinPro is going great guns. Over R70m is being spent on transformation and educational endeavours. Despite the VinPro board itself not agreeing on the need for unification and co-operation in wine tourism, this part of the industry is growing great guns: VinPro set a goal of increasing wine tourism value from R6bn in 2015 to R15bn in 2025, and with current growth of 15%, the target is well within reach.

VinPro chief viticulturist Francois Viljoen continued the woeful tale of the drought. Attendees at the Information Day were, however, not able access the figures of tonnages predicted for Harvest 2018, as “it might fall into the hands of our competitors”. For an industry responsible for only 4% of the world’s wine production, this kind of ballsy confidence would have been music to the ears of Mike Ratcliffe, who also took the podium to talk about – among other – the need for some rigid spines and assuredness among producers.

Lulie Halstead from Wine Intelligence was informative and interesting, especially the part about America and China consuming 21% of the world’s total production of wine. Although the Branding Specialists in the audiences must have ripped their Versace arm-bands when Lulie’s research showed that one-third of all regular American wine drinkers cannot name one wine brand! Another third can name two wine brands, at a stretch.

Her prediction that bulk exports will increase must also have rocked the Vodka Martini, as everyone outside the co-operative side of the wine industry reckons bulk wine to be about as much as an evil as leaf-roll, non-paying clients and a below 85pt score from Christian Eedes.

Dry – A VinPro consultant looking for vineyard growth.

Well, said Lulie, bulk wine will grow, but it will be branded bulk, the pedigree of the wine being controlled from its pumping into the flexi-tank, right up to bottling and labelling in country of final destination. Shipping bottled wine, she says, is just not going to be cool in the years ahead due to carbon footprint issues.

However, by in the same breath saying wine packaged in plastic is going to be a thing to watch, Lulie missed the world’s current anti-plastic fury which I think is going to make the plastic bubble pop before it gets any bigger.

It was up to Mike Ratcliffe to end the wine-side of the Information Day by talking about his specialist topics, namely branding and value. “If we are defined by volume we are insignificant” and “we need fewer brands, bigger brands and focussed brands – at every price point”. And a question: where is South Africa’s 10m case brand?

Mike Ratcliffe

Mike continued what had begun with Smuts and Basson lamenting the fact that current prices for South African wine are too low and that the looming drought-induced shortage was going to offer producers a golden opportunity to restructure the pricing model for South African wine.

So, we were told: producers have to develop bigger brands and they have to raise their prices.

The issue here is that, apart from these not being new messages, the calls for action failed to inform the delegates that building bigger brands and commanding higher prices are not things that producers and the industry can do themselves. For it is the consumer who decides how big your brand is going to be. It is the wine-drinker who is going to determine whether the decision to slap R6 onto a bottle of Breedekloof Sauvignon Blanc is going to viable.

This is why, to my mind, this VinPro Information Day was such as important one. Despite the entertaining sideshows of harvest conditions and Cyril Ramaphosa’s future effect on the psyche of South Africa, VinPro is slowly turning the mind-set of the wine industry as one where the commercial importance is as fundamental as the agricultural nature thereof.

Once again, it is the co-operative producers and big cellars who are going to be tasked with raising the prices and building the brands – or preferring to oversee the status quo and each unsustainable face thereof. The majority of South Africa’s producers still have a lot of commercial savvy that needs developing: market research, pro-active and correct communication, understanding route to market and utilising distributor consolidation, access to the right market consultants, branding and labelling.

And as its loyal supporters over the years and its very lifeblood, one of VinPro’s many tasks and challenges is to show these producers the commercial way. But as we say in Afrikaans, you can bring a horse to water but you can’t force it to drink.

3 thoughts on “State of SA Wine Industry Hits a New Gear

  1. Hi Emile,
    Thanks for a great summary.
    Just one foot note. Julie did actually say (when prompted with a post-speech question about predictions in alternative packaging to glass standards) that the plastic (or PET) packaging options don’t have a rosy future due to exactly that (environmental impact) and that growth will probably be seen in single serving cans and quality BIB

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