A Rosé by any other name
Local labels you've never heard of, which countries drink what and who SA should be selling to Richard Holmes does a deep dive into the export wine market
Even if you’re a committed wine collector, chances are you’ve never bought a bottle of Lesca chardonnay, or sipped on Star Tree Nouveau Rouge. Ever poured a glass of Foot of Africa shiraz, Cleefs Classic Collection chenin blanc or Helter Skelter pinot noir? Unless you’re stocking a cellar in Stockholm, Amsterdam or Shanghai, it’s unlikely you’ve even heard of them.
For these are just a handful of the wine brands, absent from local shelves, which are being poured into global markets by SA wine producers. It’s good business too, with just north of R9bn in wine exported from our shores each year.
But why rebrand, I wondered over a bottle of Cederberg shiraz recently. Where’s the value in creating another label for overseas markets? What’s wrong with the wine range sold on local shelves? Why dilute your own brand loyalty? What about costs, the ballooning stock-keeping units, and the added supply chain complexity?
The wine business seems straightforward: grow some grapes, ferment them into wine, find a buyer at the right price point, package it up, ship the wine and send the invoice. But it’s a complex category, with products ranging from vast bladders of bulk wine blended into anonymous supermarkets’ own brands to ultra-premium bespoke bottles sold for thousands of rands at a time.
Between harvesting the vineyard and the cork being popped lies a web of marketing rules, government regulations, supermarket price-pinching and plain old idiosyncratic consumers with their own ideas of what they want. Turns out, simply putting your own brand on the shelf isn’t always the best route to market.
Kleine Zalze in the Stellenbosch winelands is a cellar with no shortage of brand loyalty, and has long been respected for its award-winning cabernet sauvignon and chenin blanc. It’s no slouch at half a dozen other cultivars too.
And yet only 60% of its production is sold under its four core Kleine Zalze brands, the rest leaving the cellar labelled Cleefs, Foot of Africa or Zalze.
The reason? Simple market forces in the key European markets.
Take the UK, for instance, where the on-trade —restaurants and bars —don’t want to be seen offering wines that are readily available on supermarket shelves. The solution? Have your chenin and drink it too, by creating a separate range for supermarkets, leaving the premium Kleine Zalze labels for those loyal on-trade clients.
While the labelling may be different, "we keep the integrity of the brand, and the DNA of the product, all the same", says Kobus Basson, owner and MD of Kleine Zalze. "If we don’t control the brand and what is inside the bottle, we’re not interested."
Creating additional wine ranges also allows producers to cater for the idiosyncrasies of specific markets.
"For countries without that long relationship with SA, those typical Afrikaans names are slightly more difficult to pronounce," says Basson. "Zalze is a good wine and label to take to Asia and America, where saying ‘Kleine’ is not always that easy."
A matter of taste
Palatability also comes into play, with the growing African and Asian markets generally preferring sweeter, fruit-forward wines.
"The Chinese market doesn’t really like white wines, and when it comes to packaging they want to see gold, they want to see red. They want it in the heaviest possible bottle. They want it under cork. It’s a very aspirational market," says Pieter Cronje, head of marketing for uniWines. As SA’s second-largest primary producer, uniWines processes grapes from 3,000ha of vineyard to stock global shelves from Walmart to Sainsbury’s.
Conversely, in Scandinavian markets wine drinkers are increasingly concerned with the environmental impact of their tipple.
"They want environmentally friendly packaging, and they want a lighter bottle," says Cronje, adding that 60% of the Swedish market is bag-in-box.
"In SA the bag-in-box market is seen as cheap and cheerful, whereas in Sweden it’s common to find premium wine in a bag."
But then the Nordic region is another kettle of herring altogether, with state monopolies governing the sale of most alcoholic products.
In Sweden the liquor trade is controlled by the government’s Systembolaget — in Norway it’s Vinmonopolet, and Alko in Finland —which issues tenders to producers for specific styles of wine. If the wine doesn’t sell, the government withdraws the tender.
In other instances it’s little more than paperwork that requires a rejig of the packaging for SA exporters.
Family-owned De Wetshof Estate in the Robertson Valley is renowned for its award-winning chardonnay, but when it wanted to export its acclaimed Finesse chardonnay to Europe, it discovered the name was registered to another winery. Today, it’s a bottle of "Lesca" that you’ll find on the shelves of German wine boutiques.
Same wine, different label.
"Regional or country-specific brands are an advantage if you want to use easy-to-pronounce names and relevant icons," says Siobhan Thompson, CEO of Wines of SA, a not-for-profit industry organisation promoting SA wine abroad.
"It is all about balance, and where SA lacks is building a few global-reach icon brands."
And industry players argue that what’s more important than secondary brands is shifting away from exporting bulk wine, destined for the anonymous own-label brands sold at a discount on supermarket shelves across the globe. Many argue that the long-term sustainability of the wine industry comes down to building SA’s own brand as a leading wine producer.
"The tweaking of brands here isn’t the problem, the export of wine in bulk is the problem," says Emile Joubert, marketing consultant to a number of Cape wineries. "I’ve seen many people make a lot of money selling bulk wine, but we need good strong brands to build a name for SA wine overseas. We need premium brands at volume, selling a couple of million cases."
Mike Ratcliffe, chair of Stellenbosch Wine Routes, says: "By volume SA produces 3% of the world’s wine. We’re a very small producer selling into a very big market, so there’s very little excuse not to be sold out all the time. The market is so enormous that selling wine in volume, in bulk, there’s just no money. The only money is in branded wine and there’s insatiable demand around the world."
One producer making that shift is Overhex Wines International (OWI), a producer in the Breede River Valley that purchases grapes from selected vineyards across the Western Cape winelands. Until recently most of its wine was sold off in bulk to overseas clients, "but the past three years have seen a complete turnaround", says MD Chantelle Potgieter.
Today 70% of its production is sold in bottles, and it ranks among the top 10 wine exporters in SA. Its Balance brand is the largest single SA wine brand in the Chinese market, says Potgieter.
Many producers are looking hungrily at China, and with good reason. By 2023 it is forecast to become the world’s second-largest wine market, behind the US, each year soaking up 192-million cases of wine worth $23bn. What’s a little label tweak or extra dollop of juicy merlot in the blend when there’s a thirsty market to sell to?
"For the past 10 or 15 years Europe has been 75% of our market," says Basson. "But for growth over the next 10 or 20 years it’s the three As: America, Africa and Asia."
Just as a rising tide lifts all boats, growing the status of SA wines in these markets will raise the profile — and price point —across the category. But collaboration across the industry is essential to achieve it.
"Brand SA has a lot of work to do," says Potgieter. "In Asia we’re far behind France and Australia, and the reason for that is that most clients don’t even know SA. There is so much growth potential there, and for one producer to do that on their own is not enough."
SA wine exports, by the numbers
Value: R9.1bn (4.2% increase on 2017)
Volume: 420-million litres (6% decrease on 2017)
Bulk wine: 251-million litres (8% decrease)
Leading market: UK, R1.844bn (5% increase)
African markets: R608m (16% increase)
Leading white wine: chenin blanc, 55-million litres (4% increase)
Leading red wine: shiraz, 21.1-million litres (14% decrease)
Figures for 2018. Source: SA Wine Industry Information & Systems