Michael Fridjhon: What to make of new umbrella body SA Wine?
By Michael Fridjhon, 17 May 2023
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.
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