CAPE WINE 2015: South Africa – full of optimism

Capturing the prevailing mood of optimism, WOSA chairman Michael Jordaan in his opening address at Cape Wine on Tuesday, September 15, said he believed the local industry, that offered „the perfect blend of tradition and innovation“ was now at the tipping point where all the cumulative innovations in the wine industry would soon start showing themselves in fascinating new ways.

The Cape Town International Convention Centre has been thronging with visitors, eager to taste what he means, at this, the biggest wine exhibition of its kind in the Southern Hemisphere. While there has been a strong turnout from traditional markets in Europe, and a bigger contingent from North America, (especially and reassuringly from the US), the biggest percentages in growth have come from Asia and Africa.

„Of course, that’s from a lower base than three years ago, when we last held our show,“ explains WOSA CEO Siobhan Thompson, „but it is encouraging to see that the enthusiasm for the South African category is becoming more widespread. We’re also thrilled to see the jump in the numbers of sommeliers attending this year.“

Delegates, she confirms, have arrived from across the world.  „From Angola and Australia to Zimbabwe, and just about everything in between. It’s great to see we even have people here from Brazil and Chile.“

Asia is particularly well-represented with visitors from China, Hong Kong, India, Japan, Korea, South Korea, Macau, Malaysia, Philippines, Singapore and Taiwan.

Wine Intelligence, in its recent Compass Report 2015-16, identified Japan ahead of China as a market of major significance for wine producers worldwide, ranking it the third most important after the US and Germany.  So it was interesting to hear perceptions of its potential for South African producers, particularly given that our wines are not especially well known in the Land of the Rising Sun.

Yet Masamitsu Yoshino, publisher and director of specialist trade beverage magazine Wands Review is upbeat. Last year, South African imports to Japan rose by 19,3% on 2013, according to Japan’s Ministry of Finance. The country has now overtaken Germany to become the eighth biggest supplier of wine to Japan and there is certainly opportunity to further entrench its presence, he believes. South Africa’s value-for-money proposition makes it ideally positioned to play in the mid-price market, particularly the Yen 2 000 to Yen 3 000 price band (approximately R230 to R345).

Yoshino says South Africa’s profile as a wine-producing country has risen, following its hosting of the 2010 FIFA World Cup, but there is still substantial scope for expanding visibility. As wine drinkers in Japan are conversant with the popular French varietals, many of which South Africa produces, we have a good base from which to grow.  He adds that, generally speaking, our wines with their European elegance are styled to suit washoku  (Japanese cuisine).

With close to 300 Japanese consumers having completed their training in South African wine via WOSA, there are now more potential ambassadors to introduce the fast-growing Japanese market to what we produce.

Debra Meiburg MW, who has been living in Hong Kong for 25 years and is considered one of the most influential personalities in wine and specifically, a leading authority on wine in Greater China, is another opinion leader who sees great opportunity for South African wine. This is despite the fact that competitors such as Australia, New Zealand and Chile have the benefit of free trade agreements.

“Despite these competitors’ advantages, South African wines are — on the whole — very affordable, so they can still sit neatly in the mid-price market segment in China, in spite of its taxes.

“Also, even though Hong Kong does not have a tax agreement with the People’s Republic of China, it is possible to move product through customs smoothly with the recently-signed Hong Kong Closer Economic Partnership Arrangement (CEPA) programme and enhanced customs facilitation measures, making Hong Kong a true gateway to China for the international wine industry.”

She does caution, though, that South African wines remain largely unknown in Greater China but if top-quality producers keep coming and building relationships, the opportunities are there. „Having “a nice clean slate” to work from, coupled with the steadily growing middle market, means the industry is in an excellent position from which to capitalise.“

WOSA’s Matome Mbatha, who is building South Africa’s profile in Africa, confirms that there are visitors to the exhibition from Nigeria, the continent’s biggest economy, as well as from Angola and Mozambique, both of which have an established wine-drinking culture, and also from Botswana, Cameroon, DRC, Ghana, Kenya, Namibia, Uganda and Zimbabwe.

„Although the commodity slump has adversely affected some of these economies, we are looking at the long-term potential of African markets. We have a proudly South African and therefore proudly African story to tell. Africans enjoy the idea of consuming African-origin wines and we need to take advantage of this.“

He is also running South African wine educational courses to bolster producer marketing initiatives.

Hennie Heymans, the MD of Cape Wine’s lead sponsor DHL Express. made the point in his talk on the first day of the show that seven of the world’s ten fastest-growing economies are in Africa and that we need to promote intra-continental trade. In Europe, he said, intra-continental trade accounted for about 70% of business.  In Africa, it was less than 20%. “As the momentum mounts, the ease of doing business will grow and transportation costs will drop substantially.”

And what of the prevailing weakness of the rand?  Jordaan believes the currency has created an opportunity for every export-orientated industry in South Africa. „The wine industry exports about half its annual production already but there is scope for further growth in large markets where we are underrepresented, in particular the US, China and Africa. The challenge is to not pass on the entire currency devaluation but to use this as an opportunity to invest in brand equity to maintain headline pricing. The name of the game has shifted from volume to value growth.“

Just a few days before Cape Wine, UK-based wine-marketing guru Robert Joseph, in his keynote speech at the 2015 Nederburg Auction, spoke of South Africa’s bright wine future. „You have a great young generation of viticulturists and winemakers and a largely untapped local market – both the black middle-class population of South Africa and the countries to the north whose economies are going to be the ones to watch over the next decades. The United States is only beginning to discover your wines, but you don’t have to work to reverse a negative image as the Aussies have had to do.“

He urged producers to „raise the prices of your best wines and devote some of that extra cash into exploring and marketing to all of the other markets across the globe.“

It was a theme picked up by the founder and chairman of Max India Limited, Analjit Singh, who has been investing extensively in winemaking and hospitality, with a focus on Franschhoek and the Swartland. In his address on opening day, he mentioned how South Africa was struggling to reach the point where we could readily retail our wines for US$100 or more and he encouraged members of the industry to work together to project the high quality of our offerings, certainly deserving of such prices.

Turning the supply and demand theory on its head, he said that when it comes to excellence of wines and hospitality, it was „supply that creates demand“ that in turn generated employment.

He called on Government to become more relaxed in its approach to tourism and to follow the example of tourist-rich countries across the world in welcoming foreign visitors. We are still too imitative in many respects and we sometimes tend to be repetitive in our offerings, he said.  By opening up, we allow for a freer exchange of ideas and can accelerate innovation.

Alan Winde, the Minister for Economic Development in the Western Cape, wants to see wine exports and wine tourism grow. Calling tourism and agri-processing the two engines for economic growth in the province, he maintained that regional government had made it a priority to create an enabling environment for innovation.

So can we overcome some of the obstacles impeding our progress, from bureaucracy to low visibility in some markets and prices that do not yet reflect our wine worth? Thompson thinks we can. „We seem to generate a nervy energy that I think comes from walking a tightrope of contradictions.  Being South African, whether as a winemaker, a painter, a poet, a musician or a designer, somehow seems to demand a blend of the realist and the fabulist in all of us. In other words, we manage in our endeavours, whatever they are, to be hard-boiled pragmatists and dreamers at the same time. It is this, I think, that lies behind our resourcefulness, adaptability and capacity to solve problems. It’s what makes us daring and inventive.“

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