South African wine is growing in popularity with a 12% increase in sales in the UK. The next challenge is to bump up bottle prices

After years of suffering a reputation in the UK for sometimes dubious quality and low prices, South African wine is undergoing an exciting renaissance.
The country takes the number five position in the UK [ACNielsen, value for 2004] and managed to bump up sales by 12%, although its average bottle price for the year was still only £3.73.
That could change with the launch of a WOSA (Wines of South Africa) strategy aimed at increasing sales of wines priced £5-plus. A marketing campaign focuses on the biodiversity of landscapes and soil, which WOSA says is reflected in the variety of wines available.
Producers hope the campaign will help them gain a more upmarket image.
After years of apartheid isolation, the country’s modern winemakers are gaining an international reputation and leading the charge to go upmarket.
WOSA is pushing research showing that South African winemakers are more
competitive at the higher end of the price ladder, rather than trying to compete with big finance-led Australian companies that benefit from economies of scale.
Lunch at 96 Winery Road in Stellenbosch with three of South Africa’s top winemakers - Ken Forrester of the eponymous label, Jan van der Merwe of Douglas Green Bellingham and Bruce Jack of Flagstone Wines - provokes a lively debate about the industry’s future. South Africa already has a reputation as a Rainbow Nation and should be exploiting this to create a genuine point of difference from the rest of the New World for its wines, says Jack. “We can lead the whole charge in diversity of wine,” he reckons.
All three agree that the aim of marketing activity should be to push up price points and emphasise regionality, although van der Merwe stresses that consumers will always want big brands, which are lacking in South Africa.
He says: “We have accepted we will not be competitive on entry-level price points for much longer.”
Forrester, who has had success with his £15.99 Chenin Blanc in Waitrose, says: “We have to maintain quality at all costs and not be scared of charging what a wine is worth.”
Jacques Roux, marketing and sales director at Graham Beck, which supplies all the main UK multiples, says over-supply is squeezing producers, and the main challenge facing South African companies is poor margins. The strategy this year for Graham Beck is to push over the £4.99 barrier.
“It’s taken us years to realise it, but we can’t do £4.99 any more,” he says. “We are not like Australia, we can’t compete and we can’t over-deliver on quality any more at £4.99.”
Roux believes South Africa is in a good position to promote its wines with a terroir message, in a similar way to France.
Western Wines, which has the only top 10 South African brand in the UK with Kumala, is working with grape growers to push through improvements on quality and plans to introduce more single vineyard wines, a reserve Kumala and a Fairtrade label. Operations director James Reid says: “It’s the diversity of cultures and colours that makes this country so interesting and the marketing campaign tries to link that to the wine.”
It’s hoped Western Wines’ collaboration with pioneering winemaker Charles Back will help it create a quality image.