Michael Fridjhon: Time for a radical overhaul of SA wine’s international marketing effort

By , 17 August 2021

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Taking a pot shot at the folk charged with building South Africa’s wine image abroad is a little like looting when the cops are around to help manage the crowds. It takes very little skill and it has all the hallmarks of a one-sided game. Short of asking the referee who officiated at the first Springbok-Lions Test to make sure there’s no foul play, there’s no much else you can do to ensure it’s a walkover.

Here’s the problem. Since South African wine was welcomed back into world markets more than 25 years ago, we’ve made numerical rather than status progress. Volumes have increased around 20-fold, and prices have eased up gradually – though probably at rates no greater than European inflation plus a bit (and at a much slower rate than our own domestic inflation). As a country, our image has languished. Most of what is sold as bulk is exactly that: raw material from the colonies beneficiated by the First World at our expense.

It is probable that the reason we’ve seen such volume growth is that our wines are worth much more than we are permitted to charge for them. The buyers know that – which is why they impose a price ceiling which is difficult for us to penetrate. When you’re selling fillet for the price of stewing meat it’s not hard to find customers: it just becomes increasingly difficult to make a profit. And there can be no doubt that this is exactly what is happening: the permanent loss of hundreds of hectares of vineyard every year provides concrete proof that sales below cost are not a sustainable business model.

So if the volume growth is simply a function of the value proposition, arguably the beneficiaries of the export levy haven’t exactly earned their keep: the wines sold themselves because the price was low, and the price was low because they weren’t able to ratchet up the image of Cape wine. To be fair, there’s a bit of a chicken-and-egg to this: if producers insist on selling their wines in bulk, and at low prices, how were those charged with burnishing the image and marketing the intrinsic value of our wines expected to do their jobs?

I’ve had reason to reflect on this a great deal lately as I have found myself sitting in on online engagements with the most powerful wine buyers in the United States. By and large they like our wines. Mostly they think they’re good value. Their problem relates largely to their clientele: given the absence of a South African wine image in their markets, our wines offer no serious inducement to consumers to take a bottle off the shelf. A quarter of a century after the advent of our democracy (sic), with Nelson Mandela a household name, there still isn’t enough interest in Cape wine for the big players in the United States to consider South Africa a “must-stock” brand. If you can’t see that as a measure of failure, I’m sure Rassie will be happy to make a masterclass movie to explain it all to you.

So if we had the time all over again how should we play things differently – within the bounds of possibility (allowing for the fact that there was never going to be support from the state – which could have played a crucial role in leveraging the available funds)?  For a start, we didn’t need to spend the money we have wining and dining the people who were buying the fillet steak for the price of stewing meat. I’m battling to find a less offensive metaphor for this, but it’s like paying people to take advantage of your teenage daughter. If you look at the money that has been invested in the European markets where our average FOB pricing still hovers around the R40 mark, you do have to ask yourself if it shouldn’t have been spent building Brand SA in places where the image had been compromised from the outset.

So I’m suggesting – obviously with hindsight – that we should have let the easy markets (and they were easy, no matter what those who worked them tell you) take care of themselves. The UK supermarkets would have bought the fillet at the price of stewing meat, and the fancy independents would have bought Sadie Family and Mullineux – without the investment of an office in London and a campaign on the Underground.

We should have looked at the vastness of the United States, and the minuscule size of our marketing budgets – and not been intimidated. Yes, it’s 50 countries rolled into one, but we could have started with a few key regions, and given them everything, instead of bestowing upon it the stompies left over from buttering up the freeloaders who travelled at our expense to visit Cape Wine. Nothing shows how little you think of yourself than to pay people to visit and say nice things about you.

We are now reaping the harvest of this neglect. For example, we were so happy to be getting great ratings from European publications, we ignored the US, where we now don’t really have a track record as a national brand. In the US it’s only the US critics who count: our failure to act has meant that the US still scores us in the 80s – which makes us “unsellable” – entirely because we haven’t made enough of an effort to get the key American publications to see South Africa as a 90+ country.

It’s not too late to change all this but now we are two decades behind and the problem is that our export organisation is a little like an ANC municipality: too much of the money is spent on maintaining the bureaucracy/status quo, so there’s not enough available to pay for the work that needs to be done. The most inspired producers have long given up on the official channels. There’s no government money, even if there were an inclination to assist, and the Rand’s buying power hovers at around a third of what it was worth 25 years ago.

There are glimmers of hope: media has changed in the past two decades, great visuals can be flighted on cable TV and directed to where there are outlets which have gamely been selling Cape wine, or where there are South African ex-pats likely to go out and show there is demand for our wines. There are influential critics whose endorsements can be used to add a whiff of credibility to a country which many Americans couldn’t easily place on a map. We need to pool efforts and resources and we need to activate relationships. There are many South Africans who have been living in the US for many years. They are in positions of influence, they have connections. We need to reach out to the literally millions of Americans who have visited South Africa and get them to buy and serve our wines. And there are the wines themselves, which are infinitely better now than they were when we first stepped into the limelight after years spent in the shadows of isolation. But it will take a concerted effort, with everyone yoked into the same span and pulling together. It can be done, but only if we put our collective minds to it. Before we lose another 10 000 hectares of vineyard.

  • Michael Fridjhon has over thirty-five years’ experience in the liquor industry. He is the 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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  • Jeremy Sampson13 September 2021

    Good healthy debate
    So what are the learnings?
    Now unlike the ANC who talk a lot and do little
    let’s do something about it.

    • Stanley Edwards14 September 2021

      Hi Jeremy – I have a plan. A bold plan. I need to get like minded people together to help make it happen. Basically it’s a USA roadshow using a mobile 360 virtual reality cinema where people are virtually transported to our winelands while doing a tasting or pairing. We’ve set up our first 360 cinema in the middle of the Kruger National Park and visitors feel as if they’re sitting with the winemakers in the cellar while doing a wine tasting. Keen to be involved? Let’s chat.

  • Bartholomew Broadbent1 September 2021

    Jamie Goode wrote a response to this article on September 1st. I won’t repeat all the comments I made which were quoted by Goode but I will add this.

    Michael Fridjhon refers to talking to the “big buyers”. Do you not think he should have interviewed some independent fine wine retailers and the most important importers of South African wine? Broadbent Selections, my company, isn’t the biggest importer but we do represent more brands than any other US importer and we represent about 14 of South Africa’s greatest and most written about wine makers. [See my website broadbent.com]. Fridjhon did not interview us.

    I don’t know who the “big buyers” are with whom he spoke but Costco sells 5% of all wine in America and I assume he didn’t speak to them. They sell huge amounts of South African wine.

    Those “big buyers” with whom he did talk would say exactly the same things that they said about South African wines if they’d been asked about wine from several other countries. Portugal is a good example. They probably don’t even know that they are selling large quantities of Portuguese or South African wine. The types of wines that sell in the big buyer’s shops are brands [Costco only sells wines rated 90 pts or higher, so they don’t sell the low scoring brands sold by the other “big buyers”]. Fridjhon’s “big buyer” contacts probably do sell a lot of South African wines, unaware that those big brands come from South Africa!

    With regard to Fridjhon’s comments about South Africa being unable to raise prices, the problem is that once you’ve set a price for a wine it is always hard to go up. That’s the same problem faced by wineries in Italy, France, Spain or any other country. There are breakthrough wines in all of those countries but a commercial wine cannot go up. If you look at Villa Antinori Chianti, it hasn’t risen any faster than any equivalent quality South African wine. The way that Antinori has increased pricing is to add new wines at higher prices. If Adi Badenhorst, winemaker for The Curator and Secateurs had wanted those wines to be priced higher, he would have needed to start higher. A $12 wine will never go above $20 and maintain momentum. However, Adi Badenhorst has successfully raised prices for his wines by adding numerous other wines which are much higher priced to begin with, just as Antinori did.

    Goode quotes me on my comments about the wine press but to add to that, most of the South African wines we import are rated above 90 pts. Even a sub $10 wine like The Curator have had both their white and red rated above 90 pts. Fridjhon complains that the press don’t rank South African wines highly, that is simply untrue. South Africa have higher ratings on average than any wines from any other countries we import from. Why didn’t Fridjhon do his research?

    As an importer, we’ve elevated the reputation of South African wines [with the help of our wineries and WOSA] to be as highly regarded as any in our portfolio from any other country. Michael Fridjhon was asking the wrong people. He should have asked the fine wine retailers and restaurateurs, who would all have said that South Africa’s reputation is incredibly high, as high as any country in the world. The “big buyers” simply wouldn’t know.

    • Michael Fridjhon1 September 2021

      I don’t think we’re very far apart on this Bartholomew. You have recognised the importance of the 90+ ratings, which I have pointed out are key to commercial success with the big US retailers. But it needs a lot of SA wines to be in the 90+ for SA to be seen as a country worthy of a serious listing strategy. So the point I was making was that we should have been building that kind of credibility in the US market instead of cultivating European press and the European buyers (who were going to be taking our wines anyway at the prices they were pegged at in 1994).

      It happens that you’re wrong in your assumption about where my research was conducted: it was exactly with the big chain buyers – who lamented the absence of volume availability of SA wines with 90+ ratings.

      I have no doubt that you have a stable of highly rated SA wines. However, if what you have can’t meet the volume specs of the big players you are not going to change perceptions where it counts.

      • Bartholomew Broadbent2 September 2021

        Hi Michael, I didn’t mean any offense and I have enormous respect for you. I think we all want to see the volume of South African wines to grow. We are on the same page.

        That said, your reply to my comment included this statement:
        “It happens that you’re wrong in your assumption about where my research was conducted: it was exactly with the big chain buyers”. There might have been a misunderstanding because I do know that it was the big chain buyers who you interviewed. What I was trying to say is that I thought that you should have interviewed more than them because the perspective of an importer who tries to sell to them would have been very enlightening.

        You go on to write about them saying that they “lamented the absence of volume availability of SA wines with 90+ ratings”. The problem here is that they tend to give most of their business to massive State distributors who either do not distribute the highly rated wines from South Africa, or they don’t let them know about them because they have such huge pressure to make numbers from the massive companies like Gallo and Constellation. The politics of which wines the big chain buyers get to see is dictated by big picture money.

        To give you an example, of the obstructions we face, there is one massive chain which put out to bid the management of the wine sets. One of the big distributors won the bid to have the right to write the sets. They then proceeded to put in all of their wines in the best eye level displays, leaving a few bottom shelf spots to other wines which the retailer wanted to have. It has nothing to do with what 90 pt wines are available, it is about who has the most money and clout to dictate the sets.

        You go on to say to me “I have no doubt that you have a stable of highly rated SA wines. However, if what you have can’t meet the volume specs of the big players you are not going to change perceptions where it counts.” The fact is that we do have several over 90pt South African wines which could provide as much wine as the big buyers could possibly need. It is a problem of the distribution biases in the USA, not the availability of wine.

        Just for fun, I decided to look up the list of 90+ rated wines imported by Broadbent Selections. Currently that list has 802 reviews with ratings of 90 points or more. Of these 802 reviews, 318 are for South African wines. Of those South African wines, I could say that 7 of the wines would be available in as much quantity as would be needed by the big chain wine buyers. Many more are available in limited quantities but it is still enough to satisfy the quantities that a big chains could handle in a given price range.

        By the way, of the 318 scores of 90pts or more, they break down as follows:
        92 for Alheit
        81 for Badenhorst
        7 for Beaumont
        4 for Beeslaar
        15 for DeWetshof
        5 for Delaire Graff
        6 for Hogan
        6 for Momento
        27 for Sadie Family
        23 for Savage
        13 for Storm
        4 for The Curator
        35 for Vilafonte

        • Michael Fridjhon2 September 2021

          Hi Bartholomew
          I’ve no doubt that everyone’s experiences are different, and the commercial malice of the people who are gate-keepers is not to be under-estimated.

          As I indicated in my response to Jamie Goode, we can go backwards and forwards over this both to better understand the issues or to diagnose and prescribe solutions, but the facts remain that SA has focused its efforts on a market one third the size of the US. This has inevitably meant – given the serious funding shortage – that in the US market we are the most marginalised of the major wine industries, selling 10% of what New Zealand achieves (and their wine industry is one third the size of ours). That’s the reality and the how and why of it is so is only important if we wish to repair the damage.

          I’m happy to take the rest of this discussion off-line to see if there are things you believe will make a difference and which together we can try to get implemented.

  • Suzaan25 August 2021

    I sell more than ANY body in the US in ANY restaurant and I am still by and large ignored by my own country’s wine people. My cheapest wine by the glass is $15 and most expensive glass is $27. And I have 60 of them all by the glass.
    I have sold $ 8 million plus worth in 11 years. Wine is 68% of my yearly COGS and to think 11 years ago my cheapest glass was $6 and most expensive was $11.
    Stop ignoring the US and think your butter lies in tired tropes. It is not difficult to charge our worth if we have a proper vehicle to show it off in and that is where people like me have been here all along.
    David Trafford is also correct in his analysis that we have to convey a different image all-together and the reality is we simply do not portray what is sexy about traveling to SA vs another country which in many ways ARE superior to many other wine regions.
    My restaurant sees 95% local Americans daily.. they are your market! Not ouboet that left SA 30 years ago and gets huffy because I don’t carry his favorite Pinotage.
    We don’t work together- we ignore that which matters and have mattered and heed attention to those ‘point givers’ that sways NObody who walks into my doors. The US is not Europe and you cannot apply the same ideas here. It does not work.

  • David Trafford23 August 2021

    Great thoughtful article. Simon Farr who started Bibendum, one of the largest UK wine distribution companies, and now Cru, suggests ‘the Cape needs to promote its “California of Africa” credentials with great video and focus on great vineyards and wineries, restaurants, hotels, beaches, roads (better than most in the US!), golf etc.’ I have been to most of the famous wine regions around the world and they don’t compete with what we have here. We need to try and convey that complete lifestyle message.

  • Eugene Havemann21 August 2021

    Great article, and so true. As a group of South Africans based in USA, we got together during Covid and decided to partner with one of the leading SA Vineyards (Vergelegen). We due to launch our USA wine club, namely V Club, around mid September. Really looking forward to shifting the perspective of local USA consumers to truly appreciate what SA Wine Growers have to offer. Would be great to engage further on this topic. http://www.vclubwine.com

  • Maryna Calow – Wines of South Africa Communications Manager20 August 2021

    Dear Michael,

    Wines of South Africa acknowledges this article. We believe that through engagement we can highlight not only our focus and strategy, but also our successes as well as the challenges that we have faced in our key focus markets in recent years.

    We will be in touch with you shortly to request some time to share the above and to get constructive feedback, ideas and strategic assistance that you may be willing to share from your perspective and experience. As an industry it is imperative that we collaborate as much as possible.

  • Neil Tabraham20 August 2021

    I totally agree, Michael.
    A few years ago, back in the early days of social media, I wrote a paper as part of a BA(Hons) degree in International Wine Business. The opening line was by Gene Simmons, the singer of the American rock band KISS, turned marketing guru. He said;

    “…when I’m playing a gig, I’m not doing it for the guys in the front row, I’m doing it for the guys at the back”.

    What he was getting at is the fans in the front are already your most ardent supporters, the ones standing at the back have yet to be won over. Following this principle, I wrote a research paper on how consumers best interact with wine brands. The outcome was clear, social media is a good tool for visibility, but it’s often nothing more than a badge to show support or merely stay informed. Consumers, it was discovered, build their brand loyalty through having positive actual contact with people and places. This is true when asking international consumers why they chose South African wine. The answer is often because they had a holiday in the Cape and visited some wine farms.
    Clearly we cannot bring the entire world to the Cape to build brand South Africa, but marketing must move away from buttering up wine buyers and a few MWs, who may already be the most ardent supporters of SA wine. The buyers firstly have their hands tied. If their consumers won’t buy SA wine, they won’t stock it. If there’s a ceiling on what their consumers spend on SA wine, they won’t pay above it. There are some MWs that have contributed enormously to the challenge of raising awareness of SA wine, but again, they’re the front row fans, and the people that listen to them are their front row fans. Nobody is reaching the would be fans at the back.
    The crux of the problem is this; if consumers are driving demand, both volume and price will follow. Focus direct marketing efforts on consumers, demand and loyalty will grow.
    The final piece of the puzzle will require taking new perspectives of wine South Africa. That means presenting an image consumers want to see, not what we think they want to see. The broad brush strokes of heritage and diversity ignore existing consumer loyalties. Whether they’re loyal to countries, regions, grape varieties or brands, consumers at all levels must be able to identify what they’re buying to satisfy their own confirmation bias. However, in times of increased national patriotism, it might not be the right time for South Africa to conquer the markets of Europe and North America. In which case, take Rioja, it sells because it’s Rioja and not because it’s from Spain. In the last 35 years, the vineyards of Rioja have grown by nearly 60% with international sales increasing by 272% (Riojawine.com, 2019). It could be argued as to why but improved quality and consistency coupled with a strong regional identity, rather than broad national identity, have certainly been significant factors. Is it time South Africa developed more precise regional identity rather than following Australia and the US with the unsustainable diversity model and chasing fads and fashion? As districts and even wards in SA find their own identity, understand their unique climates and soils, what grapes they can grow, maybe it’s time for them to pool resources and ideas to promote what they do best? After all, it’s what many of the most successful regions already do.

  • Lynne Jarche Ford20 August 2021

    A very important article. How to bring the wine industry together before it is brought to its knees. Thank you Michael. Who will join the movement? Who can co-ordinate this? There will be no Government aid, that is clear. Can we the public support a levy on each bottle sold here to support this initiative? It will be worth it if it keeps OUR wine industry healthy and growing.

  • Eamon+McLoughlin20 August 2021

    “it’s like paying people to take advantage of your teenage daughter. ”

    Disgusting analogy.

    • Chris20 August 2021

      Oh, grow up. It was meant to make you sit up and take note.

      • Eamon McLoughlin20 August 2021

        Tone deaf much Chris? Is that the best the writer can do? In a country where GBV is such a huge issue? And during Women’s Month? A country where rape seems to be a national sport, and where a young girl has more chance of reaching her eighteenth birthday after being raped than actually getting a decent matric. I suggest YOU grow up mate, and show some decency and empathy.

  • Greg Castle20 August 2021

    Spot on Micheal. For too long we have had a situation where farmers employ their kid who’s ‘quite talented at art’ or ‘good with people’ to become their professional marketers. Much like asking one’s aunt who’s good at knitting to become one’s accountant. Moreover, the large wine companies have peddled the same recipe of ‘sales, thinly disguised as marketing abroad’ for way too long, employing wine people from the wine region to head up marketing. Instead they should be employing professional marketers from strong FMCG backgrounds with broader experience, and allow them to think and activate completely outside of the proverbial 1970’s box of sad tricks. But more than anything, it takes an industry to stand together for the betterment of all. Whilst currently, as my old Stellenbosch wine owner mate has always said to me, “The last time ‘we’ all stood together on anything, was on the deck of the Dromedaris.”

    We have brilliant professional marketers in this country, the wine industry needs to however get over itself and out of its myopic, nepotism infused dark hole stemming from the Co-op days, and put the right people in to head up great brands and at the top of wine companies with influence, and give them strategic and creative freedom to do what they’re brilliant at, Professional Marketing.

  • Jason20 August 2021

    Great article Michael…a great opportunity largely squandered by ineffective marketing support. Big opportunity for the future if acted on effectively. Change is needed.

  • Billabong18 August 2021

    Well said. You are quite right about American buyers only paying attention to American critics, and the same for wines scoring in the mid 80’s being unsaleable. Impressing American wine critics is the next big task and it will not be an easy one.

  • GillesP17 August 2021

    Well said Michael. You say it as it is and not like a crowd pleaser as some of the other reviewers here.

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