The lure of the south: Argentina, Chile and South Africa in focus
Bringing together three of the New World’s most exciting wine-producing countries to debate their similarities and differences was always going to throw up a fascinating exchange of ideas.
And so it proved when OLN hosted two sessions at London’s Home House, focusing respectively on the multiples and the independents, asking how these southern rivals could best enhance the quality and breadth of their uptake in the UK.
The big picture
The opening multiples’ debate considered whether New World popularity exposes the trade’s Achilles heel, asking whether the big retailers and wholesalers were holding back sales of more premium southern hemisphere wines by focusing heavily on the easy-drinking value consumer appeal at entry level.
The charge was levelled that this, in turn, perpetuated the likelihood of customers defaulting to traditional European big names at higher price levels, rather than encouraging a rise up through the more premium offerings of Argentina, Chile and South Africa.
Certainly in off-trade volume terms, these three categories are faring better than most rivals. Market research from Accolade, presented by Paul Schaafsma at a briefing at this year’s Beautiful South Tasting, showed South Africa was up 3.9%, Argentina up 26% (from a smaller base), with Chile dipping slightly by 1%, though still holding its market share better than all major rivals except New Zealand, which experienced a similar sized fall (Nielsen, year to August 16).
The key challenge is to ensure these gains can also boost more premium sales. On the upside, those present talked of a sea change in the past few years in perception and acceptance of more premium southern hemisphere wines.
Rupert Lovie of Hatch Mansfield cited Nielsen figures showing that the New World generally has been stealing share from the Old World at higher prices, albeit from a small base. Others echoed this trend.
“Whereas France and traditional countries once dominated at the top end, we are now finding that top wines from New World countries are being embraced,” said Richard Nunn of Louis Latour, representing Chilean winery Viu Manent.
“People are buying and cellaring these wines and the generation coming through, from 25 to 45, has grown up with these wines. They are simply part of what they drink.”
Tesco buyer Graham Nash agreed, saying it all came down to the right quality, at the right price, with the right packaging, revealing that the supermarket found no resistance among customers to trading up to pricier southern hemisphere wines.
Daphne Teremetz of Spar countered that discounting – more heavily associated with New World brands – continues to undermine the consumer’s confidence in spending £10 when the same wines then drop to £5.
Nash also believed that, while regionality could be useful in some cases, for seriously wine-interested customers, for the majority of sales through multiples – and even independent merchants – variety and compelling packaging giving a brief snapshot of what to expect from the wine were key.
Accolade’s Bryonie Grieveson agreed, citing Accolade research saying that “variety is key, being the most important factor in terms of consumer recognition”. She added: “It’s all about the packaging when it comes to communicating and encouraging customers to choose one wine over another.”
Tom Lethaby of Santa Rita Estates highlighted how “the use of points and endorsements from prominent critics really worked in markets such as the US and Asia”, suggesting more could be made of these strategies with Argentinian, Chilean and South African wine in the UK.
He added that branded bays, guiding consumers through the price tiers, would also help build confidence when it came to encouraging trading up.
For consultant Suzanne Strain, the growing successes of these categories at a higher level has long been coming, a culmination of work on behalf of the producers and generics which has laid the groundwork for value growth.
“The success factor has been down to all the elements being in place. The production, marketing, packaging and distribution have all come together,” said Strain.
“A lot of winemakers have been making higher-priced, quality wines, and there is a great appetite for these wines, but it is only once the distribution and recognition come together that consumers have a chance to discover this for themselves.”
The independent and online retailers at the second debate – How High Can We Go? – were split over the question of whether there was more resistance to buying southern hemisphere at higher price levels. But all agreed that education and ability to hand-sell were key.
Preet Sahota of Edgmond Wines said the past decade had seen a real levelling in sales between New and Old World wines at up to £10, with hand-selling by knowledgeable staff to open and adventurous customers, delivering a lot of success at higher price points.
Flagship Wines’ Julia Jenkins said there was little difference in the demographics of those customers who bought higher-priced non- European wines. Others, including Jo Locke MW of the Wine Society and Greg Sherwood MW of Handford Wines, confirmed this.
They also agreed a hook was needed to draw customers in, as higher-end Argentinian, Chilean and South African wines didn’t have the props of reassurance enjoyed by traditional Old World regions in terms of widely recognised appellations and names.
“For us it’s not so much getting people to move up now, because we have been seeing strong growth [at higher levels] in the past few years, but more about encouraging people to experiment beyond their comfort zones, beyond the traditional regions and varieties,” said Locke.
Jenkins has seen a marked upturn in high- end New World sales after creating a globally inclusive fine wine section, bringing together wines of £30 and more and merchandising and marketing them together. “This has boosted confidence in exploring, and sales of our higher- end wines, including Argentina, Chile and South Africa, have really increased,” she said.
Putting the winemakers first, drawing on their personalities, was as important (if not more so) as regionality for most, with the latter a useful tool for implying quality and individuality, but unlikely to be remembered by any but the most wine committed customers.
Collective, quality-driven groups such as South Africa’s PIWOSA and Chile’s MOVI were cited as excellent promoters for the quality image of their respective countries, mixing up producers from across different regions and a diversity of wines. Ray O’Connor, of Naked Wines confirmed this producer-fronted approach was at the core of what engaged its customers.
Above all, these debates presented a largely positive picture for the future of premium Argentina, Chile and South Africa in the UK. The feedback suggested the trade understanding of the still-emerging potential of these countries, coupled with a consumer enthusiasm for the wine styles already on the shelf, has begun to deliver the confidence to explore more premium wines and a greater breadth of styles. Moreover, this is translating into repeat sales.