Cape finds balance
After a bumper 2013, South African wine exports are expected to dip this year – but that is just getting the industry back into the right balance, says Wines of South Africa chief executive Siobhan Thompson.
“After our really great 2013 of exports, this year has been a little bit more stressful in terms of seeing those exports drop,” she tells OLN.
“But that drop is natural because we pushed a lot of wine out into the market to fill a gap of low harvests in Italy and Spain.
“What has happened is a return to normality, which is a good trend.”
In fact, Thompson stresses the fact that the Cape needs to achieve a balance between bulk wine being sold at entry-level price points and higher-end offers.
“At the end of this year we will see figures drop back to more of a normal percentage – the ratio of bulk has definitely dropped back to 2012 ratios, and that is what we expected,” she says.
“We don’t want bulk to become the majority of exports with the minority being packaged, because packaged creates more jobs.
“One of the challenges in the South African market is very low margins. If we look at the value chain, by the time wine leaves South Africa it is already probably not optimal in terms of the margin farmers get back. Then you take tax and excise and by the time it gets back to the producer they have earned a very low income.
“The better the margin, the more the farmer is going to invest in vineyards, people and in creating more jobs.
“We have high unemployment in South Africa, and the wine industry is cognisant of the fact that we need to continue growing jobs and creating growth within the economy. It is also important to ensure we continue building and growing brands, because brands are what we build our quality image on.”
Thompson joined WOSA a little over a year ago after 12 years at Distell, where she built up Amarula as a global brand and worked on the South African brandy market, among other projects.
She says her first year at the helm of the Cape’s wine body has been “action-packed”.
“It’s been a fantastic, stressful, challenging time with things hitting me from all directions, but I have really enjoyed the energy and the challenge.
“Working with the wine industry is amazingly energising – we have got lots of personalities, artists and just lovely people. And there is always a story, which I love.”
Her main goal in the UK is to build up South Africa’s reputation as a quality producer and encourage consumers – and multiple grocers – to engage more with higher-end brands.
She says: “We have such great offerings of high-quality, world-class wines in South Africa, and we have got to get the trade to start listing them. The UK is probably moving into a phase now where we are starting to see awareness of South African wines at a higher level materialising. The next challenge is getting the multiple grocers to buy into that.
“Independent stores are really adopting that higher level of price band for South African wines, but there is definitely an opportunity in the UK market.
“It is really exciting that over the past year we have seen South African wines grow both in value and volume. We are starting to see movement on price bands, but we need to speed that up and to get the average bottle price above £7.”
Thompson believes the best way to get people to buy into South African wine is to get them to experience the Cape themselves and, alongside UK market manager Jo Wehring, is working on getting as many leading wine writers and opinion formers to visit the country as possible. She hopes next year’s Cape Wine event will encourage even more people to make the trip.
She also notes that she is not being pulled in different directions by large and small producers, but that “everybody seems to be singing from the same hymn sheet”.
Part of Thompson’s role is to sit on the board of agricultural body WIETA, which oversees ethical trade, labour, occupational health and safety issues as well as Black Economic Empowerment moves.
“BEE is a very strong focus for the country as well as the wine industry at the moment,” Thompson says. “We have made enormous progress in terms of black-owned brands, learning assistance and marketing and educational projects. There is still a long road to go in terms of aspects such as land ownership, but there is such a will to go forward.
“It is interesting to see stakeholders come around the table at the WIETA board and talk about these issues. Producers, growers and representatives of the community all talk about the tough stuff, such as putting guidelines and codes of conduct into place.
“It is a great initiative. Getting a collaborative approach is what is important – if you don’t, you get resistance, and that is why things such as WIETA are really important. People are buying into the process.”
Thompson believes an abundance of dynamic young winemakers are injecting energy into South African wine. She says: “What you are seeing is almost another level being built on traditional winemaking ways. A whole new generation of younger winemakers coming from winemaking families are starting to be innovative and trying different things. Some fantastic examples are Adi Badenhorst [of Swartland’s Badenhorst Family Vineyards] and Peter-Allan Finlayson [of Crystallum in Walker Bay].
“They are young, full of energy and looking at doing things differently – putting a different spin on the traditional winemaking foundation.
“Another trend I am seeing is the willingness of the wine industry to take feedback and adopt it into their products.
“Winemakers are travelling about, learning techniques from other countries and bringing them back here and using them.”