Brandy Report (8/12): South African Brandy

09 March, 2015

Hamish Smith gets under the skin of South Africa’s little-known gems.


LIKE MOST WINEMAKING COUNTRIES, SOUTH AFRICA PRODUCES BRANDY. Unlike most winemaking countries, South Africa is good at it. Yet this prowess is largely unknown outside of the country’s borders, where 92% of production is consumed. A traditionally strong domestic market has satisfied producers until now but recently demand has eroded. As the traditional African consumer moves towards international brands – once the domain of middle-class white South Africans – producers will need to float the message of their brandy beyond their borders.

“South Africans, generally speaking, deem imported goods better or more aspirational than [those] locally produced,” says Edward Snell’s manager, Schalk Van Wyk. “Our historical background has led to a development of a previously unknown black middle class which has a hunger to express success with premium/material goods, as most developing economies have seen.”

KWV is a major player in the market. Peadar Hegarty, head of strategy and marketing director spirits and RTD, says South African brandy must “face up to the competitive challenge from whisky and vodka” and address “the image of brandy” which is “still seen as the poor relation of the spirits market”.

Education is key in South Africa – something the likes of Diageo, through its jointly-backed Brandhouse distribution company, has managed with its whiskies. Johnnie Walker Red grew 60% between 2010 and 2013, while Smirnoff has also taken off. South Africa is now one of the top 10 scotch markets and the wider whisky category is now about a third of all spirits sales. Meanwhile brandy now represents about a quarter of sales, just ahead of white spirits. It is in danger of being left behind in what is its only significant market. 

“The local whisky marketers have done a fantastic job of educating South Africans on the intrinsic differences between whisky offerings – and, by default, creating a hunger to learn more,” says Van Wyk. 

A trend towards connoisseurship and food and spirits matching, albeit embryonic, is the shard of light in what is otherwise a dingy picture. 

“Not all brandy products have been in decline,” says Caroline Snyman, director of luxury brands at Distell – the number one player in the market. “Some notable exceptions have come from the speciality, connoisseur segment of the market as more South Africans get to hear of the world-class performance of our products at international shows.  

“This country has won the title of Worldwide Best Brandy no fewer than 12 times over the past 14 years. We are confident that the market holds good prospects for the continued growth of the premium brandy category.”

As home to almost all of the category’s consumers, the domestic market is less about choice than necessity. But efforts need to be made so there is choice in the future. Spreading sales around the world would mitigate the risk of the current one-market strategy and is the best route to building value in the long term. 

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