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Trying to abate the bite

Published:  18 January, 2007

Far from celebrating on New Year's Eve, the South African wine industry was drowning its sorrows - probably on a lot of unsold stock - after seeing wine export volumes fall for the first time in 12 years in 2006.

The overall drop was estimated at around 5%, driven by a 9% fall-off in bottled and bag-in-box products, and balanced by a 3.6% increase in bulk wine volumes as importers sought savings on transport and packaging costs. But UK sales plummeted by 17% year-on-year, a figure that included bulk as well as packaged wine.

Refusing to take off her party hat, Wines of South Africa boss Su Birch said the drop was merely a temporary blip' in the impressive growth trajectory that saw export volumes rise from 22 million litres in 1992 to 282 million litres in 2005. In the UK, we have been badly affected by major changes in brand ownerships and distributorships,' she explained. The most obvious example has been the acquisition of South Africa's biggest wine brand, Kumala, first by Vincor and then by Constellation.'

This, she said, had resulted in a long period without support for the brand, presenting a real problem in a market that is totally promotion-driven'. It therefore boded well for the industry that Kumala was once again being promoted - and by Constellation, the world's largest wine company, with vast resources'.

But I'm not about to strap on my dancing shoes just yet. Isn't it a little worrying that South Africa is so reliant on one brand - an export brand that most South Africans, including wine drinkers, have never heard of, and which is now in the hands, no matter how capable, of an American company? And assuming Constellation does put a goodly amount of its vast resources behind Kumala, then what hope do other South African brand owners have in the battle for shelf space - especially if the UK market really is totally promotion-driven'?

FirstCape, Birch hastened to point out, is thundering ahead' as the fastest-growing label among the top 20 wine brands retailed in the UK. In addition, several major South African wine producers are refining their routes to market in the UK, with big launches planned in 2007.'

All in all, she predicted that South Africa would bounce back fast', and I'll certainly drink to that. But what WOSA seems to be offering to cure its hangover from 2006 is more of the same, with Birch talking once again about South Africa taking the lead, worldwide, in eco-friendly wine-growing' and also the weaker rand. Then, of course, there's the Variety is in our Nature campaign (still exciting', according to Birch) and the fact that the industry is not sitting with the scary surpluses of some of its competitors. (Though the SA wine grape harvest has recently been estimated at 1,335,050 tons in 2007, up 2.8% on 2006, which in turn was 10.8% bigger than the 2005 harvest. As well, beleaguered farmers are being paid up to 35% less for their grapes, and the international oversupply of wine also puts exports and prices under further pressure,' according to SA Wine Industry Statistics).

Who knows, maybe hangover cures like the famous Corpse Reviver, created at the Savoy in 1934, can bring anyone back from the dead; but legendary bartender Harry Craddock himself pointed out that too much of his remedy would simply unrevive' the corpse. Perhaps Dutch Courage is called for, rather than the hair of the dog, when it comes to South African wine, which is why I agree with local portal that the most inspirational story of all in 2006 was Stormhoek.

Within a year, this winery, famous for using blogs as its main marketing channel, doubled its exports to the UK from 50,000 cases to 100,000 cases. But there was more to Stormhoek than hype. It won the Pinotage Trophy at the IWSC and, more tellingly, accounted for an impressive 17% of all South African wine sold above 5 per bottle - precisely where WOSA has been focusing so much effort.

By blazing a trail for small guys everywhere', Stormhoek seems to prove that the South African wine industry doesn't need to pin all its hopes on big brands backed by big bucks - and that the UK market isn't totally' promotion-driven either.