The South African wine industry can grow the local market significantly by changing the way it talks to its own consumers.
Local wine sales have grown by 9% in the year ending November 2015, to 377 million litres. “This is a step in the right direction; however the potential market of consumers older than 18 years is three times as big,” said Nicky van Hille, director of The Moss Group, at the annual Nedbank VinPro Information Day in Cape Town.
She alluded to the specific Brand SA local marketing project flowing from the Wine Industry Strategic Exercise (Wise), through which the industry aims to attract 1.2 million new consumers in South Africa and increase weekly consumption by one glass by 2025. According to research done by The Moss Group and the Consumer Insight Agency, South Africans on average consume 22 beers, 8 spirits and 3 glasses of wine per week.
“These targets will be easily attainable and present a huge opportunity. We just need to get South Africans excited about our products and replace those beers and spirits in their hands with wine,” Van Hille said.
Many consumers are trying to buy into the category – wineries just aren’t making it easy.
The majority of South Africans find wine intimidating, complex and exclusionary. The cultivars are difficult to pronounce, there is a perception that consumers need to be knowledgeable about wine to enjoy it, and the massive amount of brands on the shelf are overwhelming.
“The Brand SA local marketing project has identified 12 consumer segments, and put the consumer at the heart of its strategy for the industry,” said Craig Irving, CEO of the Consumer Insight Agency. Focus areas of the strategy include understanding consumers and coming up with new ways to address their motivations and needs. Also, innovating and building brands (not labels), while implementing a revised channel strategy.
Equally important to enrolling new entrants and growing consumption itself, is finding ways to improve producer returns. Premiumisation of the wine category is a third outcome of the Brand SA strategy. According to The Moss Group’s findings, producers only make around R3 (6%) profit from every R50 bottle of wine sold. Government receives 18% via taxes, 10% goes towards product cost, 9% distribution and overheads and 8% marketing and sales. “Take a good look at how a further 26% spent on trade terms and margin is working for you – is it putting your brand in the consumer’s face? And make sure that the 20% packaging spend goes towards innovating packaging to let your wine stand out from a wall of similar bottles,” Van Hille reiterated.
She urged the industry to adopt the Brand SA strategy into their business models and collaborate closely. “Growing share of the category is a win-win situation for all role-players in the wine value-chain – so let’s work together to make it happen!”
For more information on the WISE Brand SA strategy, visit: www.winesouthafrica.info