The Cheap Majority Rules

A startling statistic was stashed away in the recent Vinpro State of the Industry report for 2018. With regards to the South African wine market, 85% of all wine sold in the country – retail – was flogged at price-tags of below R48 a litre. Sure, here in the ivory tower of wine writing, competitions, shows, twitter-missives and reams of informed opining there are howls of collective laughter at any wine daring to command below R45 a bottle. Showing just how out of touch industry commentators are with what is actually happening in the market.

For it gets worse.

Of the 387m litres of wine sold locally in 2018, 53% was punted for less than R30 a litre. Some 4% of wine fetched a price somewhere between R48 and R72. Super premium is regarded as from R72 to R108m, and here 7% of South Africa’s wine was sold last year. Heading to the top echelon of above R108 and you are looking at 4% of the country’s sales.

The hard, cold reality is that if the calls urging producers, retailers and on-trade sellers to raise prices aimed at unlocking value in the South African wine industry are heeded, it is just not the price-tags that are going to need shifting. The target markets of consumers are going to need changing, too.

Having had experience at the social and commercial end of this market, the 53% of the local wine-buying public willing to pay R30 or less for a litre of wine is just not budging. Not in South Africa’s current socio-economic situation where population growth and unemployment will ensure that the market status quo remains in place, or actually worsens.

Anyone who has witnessed the queues for R20-a-litre plastic packaged rotgut wine outside rural and urban liquor stores at month-end when social grants are paid, will agree that the demand for cheap wine among a large segment of the population is alive and well. And it is growing. Hence the fact that over half of South Africa’s wine is sold to a segment of consumers who, let’s face it, the industry should be embarrassed to associate itself with. But as long as the industry is supplying wine at that price, the thirst for this mind-numbing cheap stuff will be there.

The Catch 22 is obvious. Stop supplying wine at that level and the producers and suppliers will lose-out to other alcohol products, such as beer, home-brews, illegal fruit-ales, and so forth. But what kind of industry with self-pride, which drives a commitment to a premium product and wishes to create value for its producers and improve international image…. what industry like this fears competition from backyard brewed pineapple and mango flavoured wines concocted with one purpose, namely to provide an alcoholic hit? Is this the field wine wants to play in?

Take note again that this down-scale market sector is not the brother in jail you talk about. It is half of your entire family.

Whether the South African wine industry can truly go forward on a premium market sized at 15% of South African wine sales is debatable. That it is undesirable is, however, a fact. Unless something incredible happens in the export market where the country reaches the New Zealand model of “stuff that, we don’t need local all the action is in the US, UK and China”.

Reality is, the premium market is here on South African soil, as craft spirits, Champagne and certain South African wine brands such as Meerlust, Chocolate Block, Rupert & Rothschild, Krone, Diemersdal and Kanonkop – to name a few – have shown.

Wine brands are going to have to think bigger, because if you want to sell booze you have to play in the big leagues. One of the best local examples has been the House of Bonang, a Cap Classique riding the tidal wave of the eponymous influencer with literally millions of fans, followers and disciples. This is aimed at the glitzy main-market (a.k.a black consumers), one where whisky, Champagne and luxury spirits have been feasting while the wine industry has been struggling to capture the imagination of its own countrymen and women.

Like still so many sectors of society, division rules in this industry approach, too. And like all the others, this is one we can no longer afford.

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