South Africa's disappointing performance over the last two years can be explained by a number of factors, but the most prominent are the comparative strength of the rand (making it expensive for producers to export their wines) and the changes in the ownership of the country's major UK brand, Kumala.
In both instances, there is room for optimism, however. The rand is not as strong as it was a year ago (it
to the pound at the time of
going to press) and Constellation, the new owner of Kumala, appears to be getting to grips with the brand and improving the blends. So far, it has not pursued the aggressive promotional strategy of previous owner Vincor. This may have affected the Cape's volume sales, but in the long term it should protect what's left of the brand's equity.
According to Su Birch, chief executive of Wines of South Africa, overall sales of Cape wines bounced back in the first five months of 2007 after a sluggish 2006. She thinks that the vacuum left by Kumala's lack of activity has created a "bit of operating space for the likes of First Cape, Spier and Stormhoek". She also points to the new relationship between the KWV and Thierry's as a plus point and predicts that South Africa will regain the market share it has lost.