South Africa wine boss optimistic

11 September, 2014

Despite a challenging year Siobhan Thompson, CEO Wines of South Africa (Wosa) is optimistic that South African wines are on the up.

After a positive 2013 when South Africa on the back of three good harvests benefitted from short harvests in Italy, France and the US, has slipped back to more normal levels.

On the plus side bulk shipped wine has slipped back from approximately 60% to around 50% so more profitable packaged wine has improved.

Thompson was speaking to Drinks International at the Beautiful South tasting in London on September 11, comprising wines from Argentina and Chile as well as South Africa.

“The objective for the industry going forward is to focus on value. At the start (when South Africa came out of economic isolation on the mid 1990s) we were offering great value for the price under the monopoly system. The mindset was different. We make world class wines. The challenge is to back that.”

As to key markets for South Africa after the UK, Thompson flagged up the US, China and Africa. She said with the US it was necessary to focus on three to five key states as Wosa resources are limited.

“Many in the US do not seem to understand South Africa. Yet if you mention Nelson Mandela, they get it,” quipped Thompson.

Drawing on her experience from her previous job at leading South African wine and spirits producer, Distell, Thompson said that there were similarities between the drinking culture between the Chinese and black South Africans. Both tended to ‘buy’ a table and then share huge bottles of liquor. Generally speaking, the Chinese have sweeter palates and she stressed the importance of understanding cultural differences and trying to get to grips with the distribution system.

Similarly, she foresees huge opportunities in African countries such as Kenya, Nigeria, Ghana, Angola and Tanzania. Nevertheless in some countries the infrastructure in terms of reliable roads were non-existent. There were also sensitive issues such as health and religion that had to be taken into account.

“You have to understand that you can turn up in a township and there is a shack with a window but then a gleaming Johnnie Walker sign. That's it.”

Yet she cited Nigeria as a huge market for both cognac and champagne. So, the opportunities are there.

On the previous day at the tasting Accolade Wines announced strong growth in the UK with its Kumala, the UK’s number one South African wine brand, the fastest growing wine brand by volume in the UK top 10 wine brands

Paul Schaafsma, Accolade’s general manager UK & Ireland, said its South African portfolio is experiencing strong growth of 16.5%, against the total market. As the number one South African brand and the sixth largest wine brand in the UK market, Kumala now accounts for 1.5 million cases (9L) and the brand has increased its share of the South African category from 15.5% to 16.5% in value this year alone (Nielsen EPOS 16.8.14).

Schaafsma said: “Accolade’s impressive growth between 2014 and 2013 represents £14m in a category growing at £27m (Nielsen MAT 16.08.2014) and we believe this is due to our strategic decision to premiumise aspects of the brand; we have re-worked the packaging, introducing labels with texture, new designs and premiumised bottles. We have also increased the focus on the Kumala Reserve wines, introducing regional specific single varietals at this level.

“This has been supported by a comprehensive Kumala campaign, partnering the DVD launch of ‘Mandela: Long Walk to Freedom’, with in-store features and displays, wide-reaching Facebook activity which has attracted 80,000 fans to the Kumala page. All backed, of course, by the consistent quality of the wines which represent great value,” said Schaafsma.

He pointed out that this year has seen particular focus on the Fish Hoek brand achieving 52% growth in value and 54% in volume in the multiple grocers due to increased listings in Morrison’s, Waitrose and Majestic. The Flagstone range has also seen growth in retail, especially in Morrison’s with the introduction of the new Flagstone Cheetah Reserve and Flagstone Truth Tree Pinotage newly listed in Tesco.

Winemaker Bruce Jack said: “Kumala is a very special brand and it is great to see such success in the UK across our portfolio. Kumala has been on the market in the UK for more than 20 years. As South Africa’s biggest export brand, it is easily the most well-known South African brand in the mind of the UK consumer. This means there is huge responsibility on the winemakers’ shoulders. We have to ensure that our consumers get what they expect, as an absolute minimum requirement. In truth, we’re trying to exceed expectations, but we are mindful that this is a market-led brand.”

Facts about South Africa:

• Total market growing at 11% in value and 9% in volume. Growth driven by Kumala and retailer exclusives

• Second fastest growing country in total market (behind Argentina - off a low base)

• Average price has grown from £4.57 (2012), to £4.68 (2013) to £4.75 (2014)

Facts about Kumala:

• Kumala is the number one South African wine brand

• 1 in 10 South African wine bottles sold in the UK is a Kumala wine

• There are more than 20 million bottles of Kumala sold worldwide each year which is equivalent to almost 4 bottles each minute

• Kumala is sold in more than 40 countries internationally

• The Kumala brand is in the top ten wine brands for independent sector

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