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Michael Fridjhon: If SA wine rates so high, why is our market share not increasing?

March 30, 2016
by Christian
in Opinion & Analysis
with 20 Comments

Pierneef-Syrah-Viognier-banner-uncropped-resizeCape wine – or to be more accurate – the rarefied end of the country’s fine wine spectrum has been getting a great press lately. Most of the big name international critics – Jancis Robinson, Neal Martin, Tim Atkin (to name but a few) talk of the current releases from the mainly craft-driven cellars in glowing terms. Neal Martin – who covers South Africa for eRobert Parker has actually described South Africa as “the most exciting New World country on the scene at present.” Given how long it has taken for the wine industry to put behind it the damage caused to its image by exports of sanctions-era junk in the years following the 1994 election, it’s no surprise that producers have embraced this message with an enthusiasm which verges on the indecent.

Celebrating the successes of our winemakers without a note of caution about the role that fashion as well as the agenda of the critics plays in the national success would be as dangerous as encouraging a talented but inexperienced teenager to enter Idols. We’re doing a lot of things correctly, we have wines which over-deliver in terms of value, certain brands and cuvées offer just the right balance between charm, craft and rarity, but we’re probably not yet ready – as an industry – to step onto the vinous equivalent of the stage at the Met.

Complicating things further for us is the ongoing devaluation of the 100 point system. The old adage about Parker’s ratings (the retailer who said many years ago that anything scoring over 90 you can’t buy and anything under 90 you can’t sell) has shifted by at least 5 points. Nowadays the American 100 point system – insofar as it rates really good wine – begins at 95 with most desirable trophies bunching in the 98+ bracket. Only near-perfect/perfect (ie 99/100 point) scores are newsworthy. No one seriously reports on a 92 or 93. Critics are obviously to blame for this “currency” inflation: they are fighting for share in an over-traded market. The higher their scores, the more their names and ratings are likely to be publicised by the wineries and their PR machines.

In short, while our wines have improved across the board, and the “unobtainable” cuvées (whose rarity adds cachet to the critic’s own brand) are enjoying more international attention than ever before, we need to be careful about treating these over-effusive ratings as if they are gospel. We know we are not about to supplant California or Burgundy on the world wine stage. We need to be prudent about how much we believe of the hype: score devaluation means that we are attributing too much value to the ratings in the early 90s, while the pursuit (by critics and their followers) of small production batches that people talk about but never taste further skews “reality.”

Pride, we have been told by our puritanical ancestors, comes before a fall – a message which no doubt owed much of its resonance to the fear of the evil eye. The rather more modern “How do you make God laugh? “ – “Tell Him your plans” draws on the same trepidation of provoking karmic catastrophe. However, even before pride, perhaps we should fear smugness and complacency, elements of the same deadly sin.

This is the danger which now lurks in our sudden arrival on the radar (and computer) screens of the international wine press. We so badly want to believe that the patchy past is behind us that we’re not treating our newly arrived popularity with a pinch of cynicism. We’re only looking at the evidence which appeals to us, and we’re disregarding (or rationalising) conflicting information. We’re losing market share in Britain – just about our most important market, even if it isn’t our most lucrative. We can’t just dismiss the UK on the grounds that it is dominated by the supermarkets and the multiples who have conspired to keep our average price point way below that of New Zealand (for example). The UK is the home base of the critics we like to quote, the ones whose ratings we have come to believe. If we can’t really lift our average selling prices in the market where we are getting our best press we should be less gullible when it comes to buying into the reviews.

In fact, more importantly, we need to be interrogating this anomaly, rather than risking complacency over a bunch of pretty scores. Why, despite the softest Rand exchange rate ever, is our share of the UK market diminishing at exactly the time that we’re getting our best reviews in the British media? What is standing in the way of our converting a positive press into increased sales and greater revenues? Either our marketing efforts have been mis-directed or the punters don’t read (or don’t believe) even the most credible critics. (If the latter, perhaps they too have become inured to meaningless high scores).

Either way, it’s clear that there’s plenty more hard work to be done. We’re certainly not transforming critical success into enhanced visibility in the places where it counts. The supermarket buyers are not so much arbiters or gate-keepers as the incarnation of their customers’ beliefs. If British consumers really loved our wines, they’d be asking for them and showing a willingness to pay more for the top examples. They aren’t – and we need to register this and what it means. The first stop on the bus-ride to reality is where you leave behind your illusions.

  • Michael Fridjhon has over thirty-five years’ experience in the liquor industry. He is founder of Winewizard.co.za and holds various positions including: Visiting Professor of Wine Business at the University of Cape Town; founder and director of WineX – the largest consumer wine show in the Southern Hemisphere and chairman of The Old Mutual Trophy Wine Show.

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20 Comments

  1. RichardApril 11, 2016 at 12:46 amReply

    At my club in London, South African chenin blanc is served when people are sitting outside in the summer. When we move inside, it is dispensed with as people progress onto more “serious” producers. For New World wines people seem to go with Chilean as being the most consistent at a lower price (the expert presiding over wine-tasting at Waddesdon Manor confirmed that for me), and then French wine for the top end. But it’s not only that, I think at a subconscious level there is a lot of political negativity that enters peoples’ minds. Some people will buy South African wine in order to support the industry there, but ideological reasons for purchasing never involves more than a few percent of the punters. South Africa somehow seems a passé oenological concept, I’m not entirely sure why.

    Any old “Commonwealth loyalty” has more-or-less disappeared, though in some places like gentlemen’s clubs there will be more interest than the generality of the populace. I just think that South Africa is less and less in people’s consciousness in any other than a difficult way.

    And I am a South African living in the UK, by the way.

  2. DaveyApril 1, 2016 at 1:36 pmReply

    “The first stop on the bus-ride to reality is where you leave behind your illusions.” – Michael Fridjhon. Thirty-five years’ experience in the liquor industry. Where to begin….. Let’s just keep it simple, by stating a few facts.

    1. The wines Martin, Atkin and Robinson comment on are not the same ones that are for sale in supermarkets.
    2. Supermarkets account for 80% of wine sales in the UK.
    3. Supermarkets share of the market are shrinking, and as a consequence they have culled their ranges dramatically – thereby affecting SA wine sales.
    4. Convenience stores have ramped their share up, and by their nature, carry minimal ranges.Customers are in and out in a flash, with limited time to browse, and SA is waay down the pecking order here.

    These are the main reasons that SA share is currently badly affected. Mr.Fridjhon should at least distinguish between grocery volume brands, that do nothing for SA’s wine reputation, and quality wines that the likes of neal Martin et al. rightly recognise as being at the vanguard of SA quality wine production.

    There are many other reasons that SA wines struggle in the UK (fragmentation, poor marketing etc. etc.) but right now it’s the structural changes in the UK retail supermarket sector that is affecting market share the most.

    Less lightweight analysis while on the bus-ride please, Michael.

    • Michael FridjhonApril 1, 2016 at 2:54 pmReply

      You’re right in a way Davey: it’s a bit like SA T20 cricket. On paper we have a brilliant team, it’s just that we’re having a little difficulty winning the important matches. We have plenty of good explanations/excuses to account for this.

      So we have the supermarket share shrinking and it is true that the smart end of the trade is growing (but not at the same rate). We should be growing in the convenience stores (because they’re the guys stealing from the supermarkets) – but we’re not. And as the supermarkets shrink, they’re ditching us faster than they’re disposing of the others. I guess it must simply be bad luck – a bit like our cricketers.

    • JamesApril 1, 2016 at 3:01 pmReply

      Spot on Davey,

      And to add to that, the biggest thing holding South African wines back is associated with ageing. But not necessarily with bottles of red being laid down.

      It’s the old mentality. The one that should have checked out along with Apartheid. Held by many of the old producers, critics and wine people.

      It’s the “can’t do” attitude of the old guard. Those that blame Brand South Africa, tiering, WoSA, Robert Parker, Robert Plant, Robert Mugabe and Two Oceans Sauvignon Blanc.

      Meanwhile those at the vanguard are (not so) quietly making great wine, working together, changing perceptions and killing it.

      Move over naysayers.

  3. GP TerblancheApril 1, 2016 at 12:43 pmReply

    I cannot speak for Europe or the USA, but I live in South Korea and have frequently traveled to China and Japan ao. The market in Korea specifically, is flooded with South American and European wines. It is no mystery why. The wines from Chile and Argentina offer exceptional value for money. Compared to the few Cape producers present in this market, you can buy much superior value for money from South American producers. And ditto for Australian and New Zealand wines. The Cape standard bearers here are the likes of Tall Horse, Two Oceans and Nederburg (sometimes I see the odd Lutzville or Boland).

    If you also look at the concerted efforts by the likes of California, Chile, Argentina et al to promote their wines here, it seems that South African marketing lags behind and very little is done in Asia to promote South Africa as a quality wine producer. Among Asian customers, perception is everything. And unfortunately South Africa is not viewed as a quality producer.

    Long gone are the days that you can rely on an African animal and Mandela’s image to sell your wine in Asia. At least as far as Asia is concerned, the South African effort here needs a major rethink.

  4. LePlonkMarch 31, 2016 at 2:59 pmReply

    Isn’t the answer to the question the headline poses simple – “Because the good wines are made in small batches.”

    • MarthelizeMarch 31, 2016 at 9:31 pmReply

      That implies the only “good wines” we make are boutique. Which isn’t necessarily true.
      As important as this discussion is, it makes me want to hurl Riedels at the wall in frustration because nobody seems to ever be able to pick a point to start sorting out the mess at. Rather it becomes an indulgent game of finger-pointing, ego-squelching and buck-passing.
      I sell actual wine to actual Americans. Not critics. Not retailers. Not wholesalers. Individuals. Do you think anyone has ever asked me a damned thing about exports?

      • LePlonkApril 1, 2016 at 9:55 am

        Well, the article refers to the good ratings…

        So in the states (where we have sane ratings from Spectator, here are the top:

        2014 Sadie Family Old Vine Series Kokerboom 94+
        2012 Alheit Vineyards Cartology Bush Vines 92+
        2013 Lismore Estate Chardonnay 91+
        2010 Buitenverwachting Husseys Vlei Sauvignon Blanc 91+
        2014 Lismore Estate Viognier 90+
        2014 Tokara Director’s Reserve White 90+
        2012 Remhoogte Wine Estate Sir Thomas Cullinan Reserve 90+

        All smaller batch wines.

        Ignoring the fact that Atkin’s scores are a joke (and I can happily therefore leave them out), here are his top ones:

        Alheit Radio Lazarus
        Chamonix Reserve Chard
        Botanica Chenin
        Kershaw Chard
        Sadie Skerpioen

        and for the reds

        I think it’s Columella, Reyneke Reserve, Kanonkop Black label, etc.

        All small batch wines…

        I’m not saying our producers don’t make great wines. But Kanonkop Paul Sauer/Pinotage and one or ten other top estates does not an export market grow.

        The rest is not up there with these high scores.

        In fact, if Spectator is a guide, then we only have 13 wines with scores over 90? (or do I have this completely wrong. I’m a farmer not a data scientist).

        But these good wines don’t have a problem with exports or sales. ANd if Alto decides to up its game and make a million litres of 97 point cab/hermitage, then it too will sell.

        You of all people M will understand the terrors of the american export market and the three tier system (our OK wines cost $30… that’s where france rules the market.)

        I think collectively the wine peoples are succeeding in making the world see that we do make wines that aren’t just bargains. But I agree that in order to fetch top dollar our reds need to show they can age (and at the moment the average guesstimate age for a red at peak is 7 years, not 20).

        WHat do you think would help you as an exporter?

      • MarthelizeApril 1, 2016 at 1:46 pm

        The article refers to good ratings, yes, but the wineries you mentioned all added together simply do not constitute the type of volume that would ever work to increase US market share (and I say specifically US because that’s the country I work with) even if you ship every single bottle out to the USA to sell there, exclusively.

        And that’s one of the big problems: the clearly massive divide between our Parker-point-champs and the rest of what we produce.

        Fact of the matter is, we aren’t going to increase market share purely on the back of the 90+-ers. The hard work will be to connect those 90-100 point wines to the rest of what SA offers in the mind of the US (and UK and European etc etc) customer. The disconnect there is staggering, frankly.

        And yes, I understand the terrible three-tiered US market well. It’s a bit of a nightmare. But you know what’s another problem? The fact that many of the big importers into the USA give exactly zero craps about whether they bring in top scoring wines or not. Actually, I’d go so far as to say many actively avoid them because they lack the potential volume of sales they’re really after.

        You know what we sell a metric ton of on a regular basis? Coffee Pinotage. I won’t say which one, you’re welcome to contact me offline for more info. The US individuals who buy from us (who are often in the sweet spot ito Nielsen categories and target markets) eat up Coffee Pinotage and some other local wines that aren’t bad wines (like some of the Lowest Common Denominator wines out there) but just beige. Not award winning, but very popular with the Constantia soccer mom crowd. We sell a lot of those too. (Of course, we also sell a lot of high end wines too – including some Kanonkop, Meerlust Rubicon and we even got our hands on some Crystallum, Sadie Family Wines and I think possibly even Kershaw – obviously our customer base is diverse but there’s a whole lot of volume going into what our critics consider mediocre to crappy wines) It’s a dichotomy that seems to be largely ignored.

        My point is that MANY of the players trying to get a proper foothold in the USA have no clue what the US consumer wants – or is used to getting. I could literally go on for ages, maybe I should rather just write about this next week to continue the US specific discussion…

    • Angela LloydApril 1, 2016 at 3:10 pmReply

      That’s part of the answer, the rest of it being that these wines are sparingly scattered around the Indies. An English importer I chatted to recently told me it’s no good getting all these great ratings when consumers can’t find the wines. Even SA specialists like Handford receive a tiny allocation of top wines. The other problem is that the big producers – Nederburg, KWV – aren’t sexy, as much as the wines have improved. The lack of big producer names was a point of issue on Tim James’s recent Top 20 poll, but it is from their like we should be looking for highly rated and volume wines which will help our market share increase.
      PS Nice to see you’re still around, Plonk.

      • Angela LloydApril 1, 2016 at 3:17 pm

        The first sentence of my reply refers to Plonk’s ‘Isn’t the answer to the question the headline poses simple – “Because the good wines are made in small batches.”. My reply seems to have appeared out of sequence.

  5. Michael FridjhonMarch 31, 2016 at 11:39 amReply

    Wine Person (sic) and Greg Sherwood miss the point: we’re getting the ratings, we’re not (yet) getting the sales. It would be irresponsible not to point this out. Until you recognise the problem, you can’t begin to address it.

  6. Greg Sherwood MWMarch 31, 2016 at 9:50 amReply

    I get Michael’s point and while there is no doubt score inflation from critics is a global problem, I think the pitch of this piece is overly negative and doom mongering. The fine wine trade is a difficult business globally as this age of austerity makes consumers think carefully where they want to spend their hard earned cash. But as Michael surely knows, the fine wine arena is all about halos and trickle down glory. The more these small SA boutique brands are rated and written about, regardless whether one can actually buy the wines, the more glory is bestowed on the whole industry. We should sing and shout and celebrate, not warn of doom and gloom that may lurk around the corner. Sounds like a glass-half-empty attitude, where as I subscribe to a glass-half-full approach. Lighten up Michael… the future is brighter for the SA wine trade than it’s ever been in the past. That is reason to celebrate.

  7. Wine PersonMarch 30, 2016 at 8:17 pmReply

    A conversation between a different voice and the imaginary Fridjhon- –

    A different voice: “But many of South Africa’s Chardonnays have won top honors in blind International medal contests, sometimes even ‘White Wine of the Year!”
    Imaginary Fridjhon voice: “Those medal contests mean nothing, they are just money making schemes for the organizers!”
    A different voice: “But what about all of those young people in the Swartland? Look at the quality, the market penetration and the international exposure it has brought to South African wine?”
    Imaginary Fridjhon voice: “They are vulgar in their confidence. They should put their heads down, understand that the international media has just bought into their hype and show some quiet humility!”
    A different voice (beaten and restrained): “And the International Winemaker of the Year Award?”
    Imaginary Fridjhon voice: “Means nothing! Again hype, overconfidence and greedy event organizers!”
    A different voice (quietly): “But then how do we even begin to build Brand South Africa? Is there any way that we can begin to compete in the world?
    Imaginary Fridjhon voice: “No.”

    As a wine person, I believe it is exactly the attitude expressed in this article written by Michael Fridjhon that has held South Africa back and continues to hold South African wine back. Either South Africa puts its head up, shoulders back, works together, believes in itself and improves while pushing out with speed and force (by accepting the complements as well as the constructive criticism of international experts) or it shows the deep humility “of our Puritanical ancestors” and stays home. This is why Brand Australia, New Zealand, Chile and Argentina are where they are in the most lucrative markets and South Africa still quietly plugs away… Its most revered and elder wine statesmen continue to tell it to sit down and shut up. Disgusting.

  8. StevePMarch 30, 2016 at 7:03 pmReply

    I have been buying SA wine for about 15 years, and while there are some great values and some excellent producers, there is little overall consistency and of course almost no secondary market (which says much about the in-country value perception).

    And I have to report that I have poured a lot of SA reds down the drain – many just don’t keep well. Probably due to poor hygiene and inexperience, but the prices asked suggest otherwise. So I am very wary now. Wine proves itself with time, and SA’s time is yet to come.

    • Hennie TaljaardMarch 31, 2016 at 2:43 pmReply

      SteveP, In your opinion, how long should wine keep? By the way, I agree 100% with your 1st statement.

      • StevePApril 1, 2016 at 7:51 pm

        I think it depends on the grape/blend, but certainly I expect a shiraz or cab-sav should be good for five years if properly stored. I’ve had some SA wine last well over ten years – others are undrinkable after three.

      • KwispedoorApril 2, 2016 at 12:33 pm

        Wow, SteveP… I would agree that most SA reds from the eighties onwards do not represent two decades+ maturation potential and lag quite a bit behind the classic wines of the Old World in this respect. But really, three years is nothing.

        I am sometimes frustrated by TCA and more often by overt brett (still a bit of a head-in-the-sand issue for some) on older wines, but apart from those two culprits and the very odd other fault, I can’t think of any 2013 reds that are already over the hill. Not even the value for money stuff. I agree with most of what you say, but emphatically not with the three year thing.

  9. ChristianMarch 30, 2016 at 4:29 pmReplyAuthor

    Hi Kevin, I recently officiated at the Concours Mondial du Sauvignon in Rueda, Spain which sees some 70 wine professionals from around the world gather to judge some 900 wines. About half a dozen of my colleagues entirely failed to recognise the South African flag on my neck tag…

  10. Kevin GallagherMarch 30, 2016 at 12:43 pmReply

    As an online retaler of South African wines (exclusively) I see the problem being that most of the people buying/drinking SA wines know about SA and have usually visited SA. The bulk of UK wine drinkers don’t know about SA wines and therefore don’t buy them. I believe that one of the reasons for this is that there is no promotion or advertising of “Brand South Africa”. WoSA do a great job but do not have sufficient backing or funding to promote SA wines to the general wine drinking public. We need a generic campaign for SA wines which reaches the average
    drinker.

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