EU’s Millions for South African Wine: Make Marketing a Priority

Better late than never, as is the case of the €15m (R310m, roughly) heading the way of the South African wine industry from the European Union (EU). And about 20 years late, to be roughly precise, as the moela was supposed to have been paid after the formalisation of the wine and spirits agreement between the EU and South Africa way back in 2002. This was the agreement giving Cape’s producers tariff-free access to EU markets, as well as ensuring that South Africa stopped using geographically protected wine styles such as Port and Sherry.

The all-clear for the windfall has, however, now been given and as announced last week, the largesse is heading down south from the EU. Here, the funds “aim to unlock new business opportunities and support the development of black-owned brands, farms, education, and enterprises across the wine and spirits value chain”, as per a media release.

The allocation and use of these funds will no doubt be scrutinised by Cape wine producers and others with a stake in the business, as it is no guarded secret that within the confounds of the wine industry official organisational bodies, capital is on the scarce side.

Wines of South Africa (Wosa) – the industry arm responsible for promoting the country’s wine industry internationally – has, for example, found itself unable to pay the travel costs of key delegates to the Cape Wine showcase to be held later this year. This led to producers themselves being asked – on top of their statutory export levies paid to Wosa – to foot the bill so as to ensure a meaningful contingent of overseas guests can be jetted into South Africa to attend the event in September.

Budget cuts throughout the hallowed halls of industry bodies have been hamstringing the work of, among others, various training and education bodies. Together with the perennial news that only some 10% of the country’s wine producers are profitable, with over 35% running at a loss, any capital injection into the situation of Wine Brand South Africa is as welcome as a three-hour long spell of thunderous rain on a grazing pasture in the Kalahari.

Allocating and managing the R310m into the waiting arms of South African wine will be handled by the Department of Agriculture, Land Reform and Rural Development (DALRRD), working in partnership with the Land Bank – which will receive €10 million of the total amount – and the National Agricultural Marketing Council (NAMC).

Although the objectives of the EU funding predictably focusses on Black Economic Empowerment and creating opportunities for previously disadvantaged people, it must be realised that one thing the South African industry does not need are more wine brands – black owned or otherwise. Some 40 new brands are created in South Africa each year, and despite this proliferation of labels, the industry itself is stagnating as far as local and international wine sales are concerned. New brands are predominantly started by wealthy individuals seeking the lifestyle and ego rewards that the wine world offers, or they are founded as black-owned brands artificially sustained by hand-outs courtesy of the government and South Africa’s wine industry bodies. Neither of the two are known for showing commercial success.

To be handed the opportunity of creating and managing a new wine brand in the current environment of South African wine, thus, is a somewhat poisoned chalice. And if the forthcoming EU money is going to be used to allow starry-eyed wannabe wine entrepreneurs to do so hand-over-fist, it will be akin to pouring an oxidised tank of dry white down the drain.

The majority share of any economic windfall becoming the wine industry should be used to market and promote Cape wine and the image of the industry to broaden the consumer base. This is now the only box left unticked in the list of necessities for reaching greater commercial success. South Africa’s wine excellence with an array of desired international varieties is non-debatable. As far as sustainability and responsible production methods go, the country is among the world’s leaders. As it is in wine tourism.

But the industry has failed in strategising and implementing relevant and successful marketing actions, both internationally and locally. Those in the know – trade buyers, journalists, international judges and the rest of the vinous in-crowd – are aware of the status that Cape wine should command throughout the world. But the most important cog in that wheel, namely the potential consumer, remains either undecided or ignorant of what South African wine has to offer. This includes the global markets, as well as swathes of untapped potential local consumers.

Empowerment can only occur through economic sustainability. Concerted efforts and meaningful actions to truly unlock the potential of the South African wine industry through inspired, imaginative and dynamic marketing and promotion activities are to be ignored at the peril of all those whose futures rely on it.

Yet, the question must be asked: why has this crucial aspect still not received the attention it deserves?