Greg Sherwood MW: South African Wine in the UK – Does Turnover Match the Hype?
By Greg Sherwood, 17 April 2019
Having worked in the London fine wine trade for almost 20 years, it is truly astonishing to see how the attitudes towards South African wines have changed over this time. These changes have not only occurred among end consumers but across all strata of the wine trade from wholesalers to retailers, on-trade buyers (HORECA – hotels, restaurants and catering companies) to high-end, blue-chip wine merchants.
Twenty years ago, Brand Australia appeared to rule the roost in many mainstream retail category segments, allowing French wines to effortlessly dominate fine dining restaurant niches but also fine wine trading among the old school merchants like Corney & Barrow, Berry Bros & Rudd and Justerini & Brooks. The South African wine category, for all its minor successes post 1994 with its newfound consumer goodwill, still felt like it lay somewhere between a rock and a hard place – the value end of the market where supermarkets stacked Australian brands high and wide, offered a seemingly unending array of safe, well made products at such incredibly low, consumer-friendly prices that South Africa and even larger value producers like Spain and Chile struggled to make significant inroads into Australia’s market share.
Unfortunately for Australia, much of this volume success was built on simply unsustainably everyday low pricing (EDLP) and entrenched discounting and the resulting lack of profitability for growers eventually caught up with wineries and brand owners during the economic crash of 2008. A rocketing Aussie dollar was the final straw for many importers and within little over a year, the wine landscape had changed beyond recognition. Roll forward 10 years, after a decade of austerity politics across Europe, and the number one topic of conversation within the South African wine industry similarly remains the lack of profitability and low return on investment. Yet astonishingly, the entry-level market segments in the UK multiple grocer/supermarket category continue to mesmerise South African wine exporters. How any producer or brand owner can aspire to “make it big” in a market sector that traditionally only shows loyalty to a highly static, artificially low price point is beyond me.
Fortunately for the overall South African category, the lure of the supermarkets is not what inspired a new generation of young gun producers to enter the wine industry and create inspirational quality wines at higher price points. Indeed very few wine industries around the world ever get such a momentous opportunity to practically reinvent the entire country category within the mind of consumers and the wider wine trade, but in many ways, this is what has happened in the UK and across Europe. A new generation of consumers unhindered by the baggage of old-era politics have engaged with young dynamic winemakers in their hipster flannel shirts and frayed t-shirts and fallen in love with the new-era wines that have returned to often lower alcohols, brighter acids and vital varietal purity, factors which have made these wines unquestionably more drinkable and more food friendly.
Why is this style change so important to the over riding hype of the South African wine category? Because slowly but surely, the emphasis of when and where many of these new South African wines are being drunk has changed from a basic off-trade, take-home, commodity style wine product setting where wines are bought as part of your weekly shop, into a much more complex wine offering capable of lighting up trendy wine bar lists, infiltrating top 1-,2- and 3-star Michelin restaurant lists and being poured by the glass in top luxury hotels. This was always the on-premise consumption holy grail that South African wines seemed for a very long time incapable of cracking in the past.
In my mind, speaking as a born-and-bred fine wine merchant involved in mostly retail and private client sales, the most important aspects of on-premise consumption is the incredible trickle-down effect that then ensues. If you can convince the fussy Eurocentric sommelier gatekeepers that these wines are trendy, funky, new wave, fresh, hip, high quality, affordable and delicious with great packaging and authentic backing stories involving interesting, likeable wine making characters, they will buy and sell these products to consumers who in all likelihood will fall in love with not only the individual wines and producers, but also the regional and country category offering overall. This is where the hype really starts to be converted into a more nuanced retail opportunity.
In the fine wine end of the South African category, it could be argued that in the past, there was certainly excellent quality but the offerings came from too few producers, from too few regions and in too smaller quantities. Now days, all wine categories from icon wines to branded high street offering are benefiting from this increased hype and demand. Yes, much of this growth may be anecdotal and difficult to accurately measure across a very broad wine trade, but it is certainly my everyday experience as a fine wine merchant. The all important trickle-down effect has shifted the image of South African wine to much more premium higher ground that should, with more time, translate into greater profitability for all segments of the market as consumers become more willing to part with ever greater sums of money for South African wines.
The top-end fine wine offerings will continue to be tightly allocated but there is now a broader and more colourful selection of wines and styles from many more producers for consumers to choose from. As always, there remains plenty more work to be done by producers and the broader South African industry, but if Brand South Africa can continue to surprise, seduce and captivate the UK wine media with new tricks, end consumers will continue to open their wallets increasing wider and more often. The future has never been brighter.
- Greg Sherwood was born in Pretoria, South Africa, and as the son of a career diplomat, spent his first 21 years travelling the globe with his parents. With a Business Management and Marketing degree from Webster University, St. Louis, Missouri, USA, Sherwood began his working career as a commodity trader. In 2000, he decided to make more of a long-held interest in wine taking a position at Handford Wines in South Kensington, London and is today Senior Wine Buyer. He became a Master of Wine in 2007.
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