Michael Fridjhon: What to make of new umbrella body SA Wine?
By Michael Fridjhon, 17 May 2023
-
Share:
4
It seems we can never move away from the anguished question of Cape wine’s value proposition. It’s easy to understand why: as our international ratings go up, the hard currency value of our wines goes down. Even without the catastrophe of the Covid/post-Covid exports, where firstly volumes dropped and then bulk wine sales undermined all the hard work that had gone into the Cape wine image upgrade, we seem to be floundering.
The numbers tell their own story, as growers desert the industry at the rate of several each week, and thousands of hectares of vineyards are grubbed up every year. It’s not as if this has come as a surprise. It’s been happening for at least ten years, and despite the latest decline in the value of the Rand (which theoretically should deliver more money to producers selling at fixed price points abroad) it’s been gathering pace.
Part of the problem is a lack of leadership: the industry is made up of fragmented working parts whose needs are often in conflict with each other. It operates a little like a medieval polity, a semi-unified commonwealth in which warlords and robber barons keep out of each other’s territory most of the time while optimising the benefits of dominating their own particular spheres.
The growers are represented by VinPro, an organisation which used to be housed within KWV until the end of that organisation’s formal role in the wine industry. Much of what it does relates purely to the agricultural side of things. But it has also assumed a more visible leadership role in the vacuum left by KWV’s conversion from the statutory manager of the industry to a producer-wholesaler in 1999.
Beyond the agricultural tier – so production, distribution, wholesale and retail – SALBA (the South African Liquor Brand Owners Association) is probably the key player. Unfortunately, the wine industry’s interests there are swamped by the agendas of the major spirits and beer producers. While operations like Anthonij Rupert Wines, Spier and Stellenbosch Vineyards are part of SALBA, most of our high-end producers are not on board. It’s easy to see why: SALBA is about liquor, and the industry has argued (in court, at the time of Covid) that wine should not be tarred by the same boozy brush.
Now, despite its averred position, VinPro has entered into what can only be regarded as marriage of convenience with SALBA to create a new industry body called SA Wine. The media release expresses the hope that the new entity will “bring about much-needed improved collaboration and therefore added impact, as well as a more aligned and focused approach which will make this industry more resilient, profitable, and sustainable.”
Even allowing for the bumpfspeak of PR copywriters, it’s difficult to dismiss the idea that SA Wine will be little more than an exercise in empire-building. The fact that the new arrangement enjoys the blessing of the National Agricultural Marketing Council (which enjoys ex officio status in the organisation) does little to comfort me. What we have here are the parties who have effectively been running the show for many years now officially meeting under one roof. These are the players who have overseen the economic destruction of the independent growers and the attrition of the mid-size producers. All that’s different is that they are now visible on the bridge of the Titanic.
The fine wine producers have allowed this to happen and must share in the culpability. They are also guilty of failing to develop a forward-looking integrated focus. The winemakers and farm owners who feel the erosion of their wealth appear to have no game plan to get out of the death spiral. Mostly they lack a consumer-facing vision. They continue to make the wines they like (not what the market wants), imbuing them with brand and proprietary names that mean little outside the immediate circle of friends, family and neighbours in the same area of origin. When they fail to gain traction they blame the government/DTI for not providing funding (which is a fair criticism though it’s not the cause of their woes). Or else they blame their agents, distributors, or customers.
Individually there are many who are doing very well. Unsurprisingly, few if any of them feel a compelling need to share with their competitors the secrets of their success. This is exactly why an effective wine industry trade body is a pre-requisite for a generally successful environment. It’s a safe bet that, despite the hype, SA Wine is not going to be the game-changer so desperately needed by our grape growers and wine producers.
- 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 Trophy Wine Show.
-
Share:
Related articles
Opinion & Analysis
Michael Fridjhon: Why hasn’t Pinotage come as far as Chenin Blanc?
24 April 2024
Hindsight – we are told – is 20/20 vision. Foresight, on the other hand - by its very nature, is the province of the visually impaired. In retrospect it all...
3
Opinion & Analysis
Michael Fridjhon: Proclaiming wine drinking windows is harder than ever
20 March 2024
US critic Robert Parker made his reputation on the 1982 Bordeaux vintage. It had been one of the biggest harvests on record. While the wines were clearly very appealing, the...
Opinion & Analysis
Michael Fridjhon: Time for SA wine to adapt or die
14 February 2024
It’s kind of hard not to approach 2024 with just a little trepidation. On an international level, things are not looking rosy. Many strategic analysts – not necessarily the scaremongering...
Rico Basson | 21 May 2023
The strategy for our new umbrella body SA Wine is consumer and market focused to ensure demand lead production and inclusive growth on global and domestic front including tourism. SA Wine’s board for this reason comprise 5 brandowner representatives and 5 producer representatives as well as specialist input re labour affairs and 2 independent directors. All statutory levies of the industry (R140 million per annum and other funding) will flow via SA Wine from 1 July from where investment into strategic important areas such as global market access and promotion (via WOSA), research, transformation, advocacy and information will be done basis on clear key performance targets and sound communication. Formal stakeholder engagement with different groups re producers, brandowners, emerging business and social partners is part of our efforts to communicate but also gain insights. In future membership by brandowners and producers will be directy in SA Wine and not via Vinpro, Salba and other entities as the past 20 years. Trust that this helps.
Let’s set up a meeting a discuss
Michael Fridjhon | 19 May 2023
Rico – thank you for engaging: I felt that a press release issued on behalf of SA Wine would reasonably reflect the views of the organisation, and I’m not sure that your clarification has persuaded me to the contrary.
As I understand your note, SALBA is now a “spirits only” organisation and Vinpro represents the wine interests. The problem is that Vinpro has really only been about the grape growers, and grape growing is not the same thing as winemaking. In South Africa we call grape farmers “wine farmers” but actually the vast majority have never been in the wine business. When Vinpro resided within KWV (so call it 30 years ago) there were over 4500 grape growers but around 300 wineries. Since then roughly half the growers have bailed out of grape farming whereas the number of cellars has increased by well over 50%. The business of Vinpro has always been primary production: not what consumers want to drink but what growers want to grow. Accordingly it is appropriate for the Vinpro part of SA Wine to be dealing with important issues such as virus-free plant material, for example.
One organisation interfacing with government is a good idea because then only one industry body will be wasting its time. But is that organisation representative of wine interests, as opposed to grape farming or beer and spirits trading? This is where we don’t agree. You chose to call this entity “SA Wine” but where are there wine producers whose industry and efforts are the visible consumer-facing side of the whole enterprise, the people who bring wine tourism to the Cape, and fly the flag of Cape wine in international markets?
I’m not gloomy about the prospects of those who have been managing in the world of fine wine prior to the incarnation of this new single body with a single voice. However, I see no reason to believe that those who haven’t benefited from the leadership of Vinpro/SALBA in the past will be better served by the mis-named SA Wine.
Or course I’m always ready to be persuaded and I’ll take you up on your invitation to share a glass of wine with you and learn more.
Rico | 19 May 2023
Michael, it is a pity that you seemingly relied on a media release, versus a direct discussion with the industry leadership to make assumptions and some open ended statements. I think you underestimate the extend of changes made (after extensive consultation with producers, wineries, trade, social partners and government for 2 years) in the lead up to forming a new trade association (SA Wine). These include fundamental changes in the roles of Vinpro and Salba (who will in future be the spirits trade association), but also address clear fault lines in current structures that include lack of coordination, accountability, consumer focus, various voices and ineffectiveness. In your article dated 24 January 2018 you comment at length about the inherent conflict that Vinpro has. https://winemag.co.za/wine/opinion/michael-fridjhon-where-to-for-vinpro/. Well the restructured Vinpro will in future focus on the producers in terms of virusfree plantmaterial, technical and economic solutions, whilst SA Wine will have a clearly defined strategy and focus that include advocacy and services relating to beneficial market access, inclusive growth, skills development, RDI, business intelligence, excise, illicit trade etc. So what are the benefits of creating SA Wine? Firstly a single voice for SA Wine, accountability at every point, optimised application of resources and improved collaboration between functions, in line with industry strategy and objectives. Improved speed and agility, especially in terms of decision-making.
There is no doubt that the sector (like many others) have massive challenges and thus the reason for significant structural changes in the sector (regional shift and consolidation), but I differ 100% with from your “gloomy” sentiment re the outlook for the SA Wine Industry. We have more collaboration and focus in the sector at farm, business and regional level than ever before with significant foreign investment being made and a booming tourism sector.
My invitation: let’s have a glass of wine that I can share the facts and detail strategy with you.
It may also be interesting to reflect on the Australian wine crisis (that is not only due to China) and why I belief SA Wine has massive opportunities if we collaborate, instill trust and step change https://www.meiningers-international.com/wine/insights-wine/australian-wine-crisis-heres-why
Kind regards
Rico
Greg Castle | 17 May 2023
I tend to agree with Michael’s sentiments on this matter, although one could argue that any change would be better than the status quo. That said, one wonders why the proverbial tail should wag the dog in this new structure, if one is seeking (or ought to be) true Market Orientation (i.e. providing what the market/s ‘need & want’). Instead, is this not perpetuating the legacy of our being extremely myopic and ‘Production Oriented’ as the SA Wine Industry, and thereby forced to ‘sell’ what we ‘want’ to produce, rather than the other way around. This just leads to price wars and eroded profitability. SA Wine, if led by a strong VinPro back-end focus, potentially stands to merely make matters worse, rather than better. One also wonders where WOSA might fit in with all this, if at all?