South Africa must invest more in brands

02 October, 2015

The South African wine industry needs to up its game and introduce more brands and premium tiers, it has been warned.

Trade visitors to last month’s Cape Wine show in South Africa were urged to put greater effort into building brands to counter the growing trend for own-label products from the country.

Accolade Wines’ category development director Jane Robertson said “cheap, blended, unidentified wines” were taking shelf-space at the expense of brands.

“South Africa has been a success story and there has been 20% growth in sales over the last four years,” she said. “But there is a danger it has hit a decline. South African wines are not available in as many places as they were, so fewer places are selling it and where they are, people are buying it less.

“It is not getting the promotional space, and if the country doesn’t get space on the gondola end and that promotional noise, it’s a real problem.

“Brands are less than a quarter of all sales, which isn’t reflected in any other country of origin in the UK. The only place South Africa is picking up consumers from is Germany – that’s not a good place to be. And the category has also lost a lot to Australia.”

She added: “We aren’t going to get consumers to go from spending £4 to £10 in the click of a finger. We need something in the middle ground – that’s where South Africa needs to focus. If all the sales are going through own-label, consumers don’t have anywhere else to go. It’s just about [the market] being mindful that that’s not all South Africa becomes.”

Majestic buyer Matt Pym said: “There have never really been the strong mid-market brands like Villa Maria or Oyster Bay. The brands that have been successful have been at the lower end, brands like Kumala and First Cape. But it’s also about how you define a brand. Vergelegen would be a brand. Any estate winery would say they were a brand.”

But Siobhan Thompson, chief executive of Wines of South Africa, said premium brands were beginning to take hold. “South Africa is like a young adult making its way in life, and it’s coming of age now. The premium brands are starting to come through and I think consumers are getting the message.”

Another leading supplier said: “Some prominent South African brands have taken a conscious decision to move away from deep-discounting activity to help bring the category up and raise prices. It takes time, but South Africa is well-placed to get the brand positioning in the crucial mid-tier right.

“The wines are better than ever and it has a great image to sell. Unlike other countries it’s not stuck in a price rut, which makes the story that much easier to translate into sales.”

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