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The Cape Escape

“standfirst”>Wines of South Africa has a cunning plan to lift pub and restaurant sales in the UK – get key on-trade buyers to become its brand ambassadors by taking them out to the Cape, says Robyn Lewis

“I’D SAY that the on-trade is definitely an area where South African wines are currently under-represented,” Sophie Waggett, marketing manager of Wines of South Africa (WOSA) in the UK, admits. “Which is why we are this month announcing a new strategy for the sector and putting some serious time, money and effort into the project.”

Looking at the statistics it isn’t hard to see that Waggett is right. South Africa enjoys some 10.2% by volume market share in the off-trade and 10% by value (ACNielsen MAT to end December 2004), but in the on-trade it holds just 5.3% of the market by volume, down 0.1% on 2003, and 5.4% by value, again down 0.1% on 2003 (ACNielsen MAT to December 2004). “So it is clear that there is a real opportunity for us to elevate the position of our wines here,” says Waggett.

The new strategy is designed to encompass the entire on-trade from topend restaurants to pub chains and all in between. However, with current South African on-trade listings too small to be able to do any major work with consumers via promotional mechanics in bars, restaurants and hotels, the initial focus of the campaign will be to target key ontrade buyers in the industry and increase the number of on-trade listings. “The idea is that while we will be using some wellused on-trade mechanics through 2005, things such as consumer competitions and staff incentives, we will also be launching a strategy called Escape to the Cape,” Waggett says. “The proposal is to get as many key on-trade buyers out to the South African winelands over the next three years. The initial budgets seem to suggest that we’ll be able to take 100 of them out to the Western Cape between March 2005 and February 2008. On their return from South Africa we will continue working with these guys and, what we hope, is that we will be making them all into brand ambassadors, who will convey a strong word-of-mouth message about our wines in the sector.” PR and advertising will also be put in place to reinforce this, of course, and the WOSA team will be sponsoring a total of three round-table discussions with the drinks business to tackle such issues as “How does the new world steal market share from the old world?” and “How do we tackle premium pricing in the ontrade?”

Good timing

The WOSA office is obviously confident that its new approach will achieve some pretty impressive results over the next three years, but what does the trade itself think? Is now the right time for South Africa to be targeting the on-trade and is this the right approach? Tim Veale, marketing manager at Louis Latour, says, “I definitely feel that this is a good time for South Africa to be targeting the sector. The on-trade is increasingly moving towards buying high-quality wines with regional character, which they can handsell to their customers at realistic prices. We have found the on-trade very receptive to our South African brand, Groote Poste, and recently ran a promotion with the Sauvignon Blanc varietal that was very well received. We used branded tent cards, bar stands, neck tags and ice buckets to sit on the bar, and ran a discount on 10 cases or more with one free case added to try to encourage customers to trade up to 15- case drops, and it was very effective; Groote Poste Sauvignon Blanc doubled in sales over the period.”

The fragmentation of the sector, however, means that promotions need to be tailored to each individual outlet in order to gain really strong results. Matt Wilkin, group consultant sommelier at the Capital Group, says, “At The Capital itself South African wine really does have to be hand-sold but in our other outlets, including The People’s Palace and Le Metro, it is varietally listed and it does very well without much pushing from us. When I’m selling on the floor I do tend to talk about the wines as good for lunchtime drinking in particular, as people have a tendency to prefer more structured, complex old world wines in the evening.

“Generally there is a bit of a perception that Australia offers better quality, which has come about, I think, from Australia’s very successful branding, both generically and with individual brands, and I think South Africa can, and should, learn something from that. Look at the way Australia has managed to push its topend wines by associating them with Aussie chefs and great Australian food. This has been very successful in encouraging the idea of serious wines from there – serious food with serious wines. And, really, linking the country’s cuisine and wine is an obvious thing to do. Look at sake and sushi; no one in Western restaurants would necessarily have thought to drink sake with sushi but the two are linked and have therefore grown in profile together.”

The idea of linking South African food and wine is equally encouraged by Jeremy Borg, marketing development manager at Omnia Wines UK. “We do need to talk more about cuisine and culture and all those things that people associate with a gourmet experience if we are to make any serious impact in the on-trade,” he says. “I think that will help engage the top-end outlets and then the pub chains, etc will eventually follow. The other approach is to start creating some successful ladder brands, which will help people trade up and that is what we are trying to do with the launch of Kumkani in the UK.”

Kumkani is a brand that has already seen some success in the US and its launch over here reflects the new emphasis the company has put on the on-trade sector. “We have been working on new products that are on-trade specific and have been looking at ways of pushing our existing brands such as Arniston Bay,” Borg says. “I really think that having these existing brands present in the on-trade is important for the category to grow and I do believe that consumers have a concept of the relationship between on- and off-trade prices, so it shouldn’t be too much of an issue.”

Lack of awareness

Eileen Ginger, wine buyer at Whitbread, agrees with Borg on the branded wine issue, admitting that, “as a business we have struggled with sales of South African wine so far, yet we don’t with other New World wines. We couldn’t even sell Kumala.”

Ginger puts this down to the lack of brand awareness in the South African sector, with, she says, really only Kumala flying the flag in the brand charts. “I think it would really help if they could build brands other than Kumala and get them into the top 10 or top 20 UK wines.” In fact the top on-trade South African brands are currently Stowells, Intro 2 and Stowells Signature, and only Stowells South Africa appears in the on-trade top 20, according to WOSA, though Ginger does confess that brands such as Leopard’s Leap and Arniston Bay, which are coming through now, are helping to increase sales.

“I think that there is some good Sauvignon coming out as well, which can compete with New Zealand and Chile,” Ginger continues. “I think that they should do more to push their indigenous varietals, however, as Chenin and Pinotage offer a real point of difference. People like Ken Forrester and Charles Back are doing great things with Chenin but, again, we come back to brands as we need the bigger brands to raise the profile of these grapes.”

 Chenin Blanc, in fact, was repeatedly mentioned by those interviewed as a strength of the South African offering in the on-trade. Neil Bruce at Bibendum says, “At the entry level Chenin is a muststock and on our chart it plots perpendicular growth. It is a light, crisp, easy-drinking style and people associate it with South Africa. That is good because it gives us a positive association to build on, but the flipside is that there’s more Pinotage than we can sell as, at this level in particular, it does not seem to have caught on in the same way.”

Wilkin at The Capital also admits he does not see great demand for Pinotage either: “People just aren’t asking for it. It’s too bitter, I think.”

Generic push

In general, then, it does seem that the ontrade is beginning to take South Africa more seriously and, what’s more, there is much support for the generic push in this area. Andrew Bewes, the newly appointed commercial director at Liberty Wines, says, “The advantages of building a presence in the on-trade aren’t just the potential growth in value, though that’s important, but in terms of brand-building it’s invaluable. Being in 100 restaurants is really the same as being listed in a multiple and the more presence we have the more long-term loyalty to the category will be built. To be considered as a mainstream wine producer you really must be seen in restaurants.”

Waggett agrees, commenting, “This strategy really fits in with our premium strategy in the off-trade. We won’t be forgetting that side, but this does give us more scope.

“People have already demonstrated that they are more than willing to drink South African wine in the off-trade. Hopefully, with our campaign, they’ll start to be just as willing to drink it in the on-premise. What’s important is that we’ve identified and committed to the on-trade, and that’s exciting.”

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