Jamie Goode: UK vs USA – where should SA wine’s export focus lie?

By , 1 September 2021

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Ruffian Wine Bar, East Village, New York.

In a recent opinion piece on this site, Michael Fridjhon discusses South African wine’s export strategy, and in particular, takes Wines of South Africa (WOSA) to task for focusing on the UK market (which accounts for fully 25% of South Africa’s exports by value). He maintains that the wines could sell themselves in the UK, and says that instead, the focus should be on the USA. His assertion is that this is potentially a bigger market and one that hasn’t so far appreciated South African wines. According to Fridjhon, if some effort were made in the USA, and the UK was left alone, then US buyers and critics would be persuaded to show South Africa’s wines more attention and prices would rise.

I have a lot of respect for Michael, but I think he’s wrong here (he’s also an influential figure in South Africa, and people listen to him, which is why I’m writing this response). But rather than just reply with my impressions, I spoke to three people who might know a bit more about this than me. First of all, Jo Wehring of WOSA in the UK. She says that the UK is doing pretty well for South African wines and shared the latest export figures. In the year to date July 2021, value sales in the UK were up 43%. And her counterpart in the USA, Jim Clarke, also reports the strong performance of South African wines there, with value sales up 41% in the same period. Something is clearly working. (As an aside, the ad campaign on the London underground that Fridjhon references date back 15 years.)

I got an illuminating response from Bartholomew Broadbent, who runs US-based import agency Broadbent Selections with a particularly strong South African portfolio.

“I totally disagree with Michael Fridjhon’s article,” he says. “He insinuates that the US press can be bought. He insinuates that South Africa hasn’t succeeded in the USA.”

“The fact is that the press in the USA is very appreciative of SA wines,” Broadbent continues. “The wines get the scores they deserve. There is no upper limit to the price or scoring of South African wines, as proven by Eben Sadie.”

“Most of the South African wines we import, and we import more brands than anyone else, have received regularly scores above 90 pts. Even value wines, like Badenhorst Secateurs Chenin Blanc consistently score north of 90 pts.”

“WOSA [USA] has done just as well as the New Zealanders. We’ve elevated the reputation of South African wines, with the help of our wineries, to be as highly regarded as any in our portfolio as those from any other countries. Michael Fridjhon was asking the wrong people. He should have asked the fine wine retailers and restaurateurs, who would have all said that South Africa’s reputation is incredibly high, as high as any country. The big volume accounts wouldn’t know.”

“As for the wine press, we [my company, Broadbent Selections] and WOSA know who the press are, and we generate great press through the most important writers. The most effective ones do write positively about South Africa’s quality. But you cannot buy the good press. Lettie Teague from The Wall Street Journal can’t even accept free samples. Dave McIntyre from the Washington Post writes regularly about South African wines. Ray Isle at Food&Wine is a big fan. Eric Asimov in The New York Times the same.”

“I have no idea how much WOSA spends in the UK or the USA but they do a good job here. Perhaps a few unsuccessful South African winemakers have whined to Fridjhon but the best wineries are doing well. We can’t get enough of wines like Mike Ratcliffe’s Seriously Old Dirt or some of Sebastian Beaumont’s wines. Chris Alheit’s reputation could not be higher than it is, neither could Eben Sadie’s. South Africa is recognized widely in America as producing some of the greatest wines on the planet. That said, only 25% of Americans drink wine, most of those don’t drink it on a weekly basis. Of the people who spend more than $20 on a bottle of wine, it is probably only about 1% of the 25%. America is a vast market for wine but most of it is under $7 a bottle. South Africa does well in terms of prices achieved and penetration into the high-end market.”

Strong words! Personally, I think one of the problems is that Fridjhon is failing to segment the market properly. At the bottom end, in a market of oversupply, no one is doing well. Prices for bulk wine are low globally. Ask the Chileans. Ask the Spanish. Why should South Africa expect special treatment when buying is taking place on the basis of price? No country has ever elevated the prices of their cheapest wines: the market dictates them. WOSA could spend all their money helping promote South African supermarket wine and it wouldn’t change a thing. Commentators can stamp their feet and wave their fists in the air, but for the cheapest wines, the only thing that will raise prices is undersupply and enhanced demand. This is not really where South Africa wants to be playing on export markets. At this level, if you do raise your prices, sales fall off a cliff.

And as for WOSA’s work in the UK, as a UK-based journalist I think they have done a really good job supporting journalists and the trade here. Yes: Eben Sadie will sell all his wines without any help. But there’s a whole segment of mid-priced, quality wines that are selling well and for good prices in the UK, and this is the result of hard, sustained work. And the UK journalists who have specialised in South African wines have a reach that is beyond this small island. Neal Martin writes on South African wine for Vinous in the USA. And a couple of years ago I presented a seminar on South Africa’s wines at TexSom in Dallas, to some of the great and good of the US wine scene. And I’m sure Tim Atkin’s South African annual report has a global readership, as does Greg Sherwood’s website and his social media posts. Money spent supporting South African wine in the UK has been well spent.

We all want to see South Africa’s wines thrive on export markets, but these are challenging times for some market segments, and there’s no real evidence that diverting funds to the US would have the desired effect that Fridjhon asserts in his piece.

  • Jamie Goode is a London-based wine writer, lecturer, wine judge and book author. With a PhD in plant biology, he worked as a science editor, before starting wineanorak.com, one of the world’s most popular wine websites.

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Comments

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  • Bartholomew Broadbent2 September 2021

    I don’t think it is fare for Michael Fridjhon to compare South Africa’s USA sales to New Zealand’s. Nobody expected New Zealand to have such a success story and no amount of marketing could have achieved that. It was near miraculous. New Zealand is a very unusual situation, last I looked they were the #3 exporter of wine to the USA. Countries like Spain, Portugal, Germany let alone many other wine producing nations have been selling to the USA for decades longer than New Zealand and haven’t achieve a fraction of the success. New Zealand caught a wave by being a one, quasi two, grape nation [yes, they grow more varietals but the general public only know that they produce Sauvignon Blanc and, if educated, Pinot Noir] just as America was shouting “anything but Chardonnay” and Sideways hit Merlot. You cannot say that Wine New Zealand did anything much different to WOSA. In fact, David Strada and Rory Callahan did such a similar job that I sometimes wasn’t sure which one represented which country, they collaborated like brothers. New Zealand is an aberration which nobody can emulate. To suggest that WOSA has failed because New Zealand caught the wave is unfair. WOSA does a great job and has been doing an outstanding job for years. It is just very difficult to be a success in America and if you do succeed too much you risk the fate of Australia which collapsed, throwing many of its wineries into liquidation. Chile suffered the same fate but had less dramatic consequences. Slow, consistent growth is preferable.

  • Greg Sherwood MW2 September 2021

    Great commentary Jamie. Sitting in SA and observing the UK and USA markets from long distance is an exercise in watching ever shifting mirages. As you mention, most arguments on social media inevitably boil down to many individuals talking across purposes and certainly not discussing the correct segmentation of the market. As I regularly point out, which Michael never acknowledges, is that the USA is by nature, a very fickle market and a very fragmented market. Very much 50 countries stuck together. Michael completely misses the point that many much much bigger, wealthier wine producing countries than SA also struggle to crack that market. Just look at Australia and their dramatic rise and fall with so many mainstream brands. Fingering SA as peddling some kind of failing style of wine promotion strategy in the USA is just wrong and quite frankly insulting to the legions of people working so hard in another very competitive market. We can always do better of course, we can always sell more wine of course but Michael would do well to acknowledge that no amount of money that South Africa can afford, would ever achieve anything close to his grand market aspirations.

  • Derek Hewitt1 September 2021

    I think Jamie and Bartholomew entirely miss Fridjhon’s larger points in their rush to defend the status quo. Of course there are critics like Lauren Buzzeo and Neal Martin who love South Africa’s top wines, and who write wonderful things about them. The elite wines score very highly, as they should, and Broadbent is doing fine working the top 5%. The challenge is not the high end or the low end: it’s the range from $8 – $25 per bottle where 52% of American off-premise wine dollars are spent (and off-premise is over 80% of the business). Having spent many years on Madison Avenue focused on segmentation, I would agree with Jamie that it’s the key to breaking into the US market. But to suggest that there are only two segments: high-end or cheap loss-making supermarket wine, is to drastically oversimplify the opportunity. A walk through Total Wine or Costco – a couple of quality wine retailers who really matter – quickly reveals that South African midrange wines are conspicuous by their absence. (For example, the Total Wine I visited yesterday has a Portugal section – but no South African section.)
    These midrange price points fund the concerted marketing efforts which have propelled New Zealand and Australia to nearly $500 million in US sales each, vs South Africa’s $50 million. It’s not lack of love from the critics, or even from the retailers, that leaves SA wines so far short of parity. It’s the clear lack of consumer demand that means it’s harder for retailers to stock them and for critics to score them. To me, Fridjhon’s thesis is not that WOSA is not trying; it’s that there is about $350 million of upside in the US market if we pull together and focus the resources to build the South African brand using sophisticated, data-driven marketing. That potential quantum leap in prosperity for this embattled business is available nowhere else. If this were the Rugby World Cup, would we surrender the field to the New Zealanders and Aussies so easily?

  • Michael Fridjhon1 September 2021

    Thank you for your comments, and for the thoughtful engagement on the subject, Jamie. No one disputes that the bulk wine trade is not where we want to be – though it seems that this is exactly where we have been in the US in 2020. (Bulk to the US increased in 2020 from 1.39m litres to just over 9m litres)

    However, even with the questionably gratifying increase in SA wine exports to the US in 2020 (achieved mainly by a 700% increase in bulk wine sales) we are embarrassingly under-represented in the world’s largest wine market. In 2019 the value of SA’s wine exports to the US was $49m. To give this context, New Zealand – whose wine industry is one third the size of ours – sells ten times the value of our exports to the USA.

    The USA consumes 33m hectolitres of wine. The UK just under 14m. At one level my argument is very simple: we should be making more of an effort where the market is bigger. Willie Sutton the bank robber was asked why he steals from banks, and is said to have replied “Because that’s where the money is.”

    Batholomew Broadbent suggests that I insinuated that the US critics are for sale. I did no such thing. If I had meant to say that I wouldn’t have beaten about the bush. As for the rest of his grandstanding about how well his SA brands are doing in the US – I’m very pleased for him, and even happier for his suppliers. Their presence in his portfolio is good news for the image of SA wine. But sadly, in terms of the Cape’s presence in the USA, these total volumes are insignificant.

    The point I was making, and which did seem obvious enough to most of the people commenting on my piece, is that complacency is not a strategy for winning in the big leagues

  • Angela Lloyd1 September 2021

    Thanks, Jamie, useful information. I would like to add the tremendous support South Africa receives from the Wine Enthusiast & Lauren Buzzeo in particular. Their coverage isn’t about only the wines but also South Africa’s particular circumstances. For instance, I wrote a long and detailed piece about what has happened to the wine industry since our first Covid lockdown: inter alia, how the alcohol bans affected harvest, exports & local liquor sales. I know it was a real eye-opener for Lauren and her colleagues at Wine Enthusiast, hopefully for all their readers as well. Knowledge and a better understanding of South Africa as a country has to be of benefit to wine and other goods we sell there.

    • Bartholomew Broadbent2 September 2021

      Hi Angela, when I made my comments to Jamie, I had included the Wine Enthusiast [and Wine Spectator and Wine&Spirits] but he decided to omit those from my quote. I don’t know why but I would guess that it was because we’d expect nothing else from those three and he was trying to emphasize that mainstream newspapers were featuring South African wines. He’d have to confirm that but I am sorry if you thought I had ignored the amazing job that you are doing at Wine Enthusiast. I admire the focus you’ve all put on the South African wine and also travel features.

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