South Africa must focus on premium wines

19 September, 2014

Leading suppliers have warned that South Africa needs to ramp up its focus on premium tiers if it is to maintain impressive growth that has seen sales rise 9.5% to £521 million (Nielsen, year to August 16, 2014).

South Africa has leapfrogged Spain into fifth place in the UK sales chart and is up in every area: 11% more shoppers, 12.7% increased basket spend, volume and value growth.

But sustainability will only come from trading shoppers up, suppliers warned.

Jane Robertson, category development manager at market leader Accolade Wines, said: “The category is hitting the real sweet spot around £5. This is what most UK consumers spend. It also has quite a high share of the price bands under £5. But now we have got people in and got them reappraising South Africa, and for sustainable growth we need to be thinking about what else we can do to get UK shoppers into that £5-£7 bracket and the over-£7 price points, where South Africa has some amazing wines to offer.”

The country’s largest BWS producer, Distell, sees a strong future for premium South African wine and has formed Distell Vineyards & Estates in a bid to treble its share of the premium tier in the UK.

Carina Gous, chief executive at the new company, told OLN: “We want to build up the category at higher price points. We have the wines. “There has been an incredible

improvement in quality in recent years but there is still a job to be done to change the perception of South Africa as a country for good value to one of quality.

“Hitting the lower price points is not sustainable. The growers back home are really struggling. We want to have a sustainable category for the future. We all know what needs to be done as an industry. We would like to lead this conversation and play a significant role.”

She added: “We need to target other channels apart from the big five retailers. We need to target independents and our top-end brands can bring them unique benefits.”

Accolade’s UK boss, Paul Schaafsma, said Kumala is now the number six brand in the UK and is selling more volume than Jacob’s Creek and McGuigan.

“That’s a big step forward for South Africa,” he said. “We are growing as a business at 16.5% for South Africa. If you took Accolade out of South Africa, the growth would only be 3.2%, so our three brands are contributing a significant amount.”

Wines of South Africa agrees that the biggest challenge is to get the trade to buy into higher-quality wines from the Cape.

Chief executive Siobhan Thompson told OLN: “One of the biggest jobs we have to do is to emphasise the quality of South African wines and get the trade to start listing them. It is more from the multiple grocer side – independent stores are really adopting that higher level of price band.”

She added: “The UK is moving into a phase where we are starting to see awareness of south african wines at a higher level, and the next challenge is getting the trade to buy into that.”

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