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SOUTH AFRICA ON-TRADE – No middle ground

Will first-hand experience of the beauty and diversity of the Cape’s stunning winelands inspire British on-trade buyers to become more adventurous in their choices? Clinton Cawood reports

If you’ve got it, flaunt it. In this case, South Africa has got the Cape winelands, and the flaunting is for the purposes of promoting its wines to the UK on-trade. Wines of South Africa (WOSA) has called this initiative Escape to the Cape, taking groups of on-trade buyers to visit the country and experience its vineyards and local hospitality. WOSA’s UK market manager, Jo Mason, says, “It’s a commercial visit, but it’s also about getting those buyers to understand what South Africa’s about. It shows them, for example, what Pinotage can do, or gives them a chance to meet the Chenin Blanc Association.” Those who have taken the trip already include Hakkasan’s Christine Parkinson and Ronan Sayburn from Gordon Ramsay.

This kind of activity directly addresses the potential for South Africa that the UK on-trade presents. In terms of sales in this sector, Mason acknowledges, “We’re still pretty small. We’re growing slightly, but from a small base.”

This has spread optimism among a number of those involved in the South African wine trade. For PLB’s on-trade director, Julian Drake, “SA wine is indeed capable of increasing market share in the UK on-trade.”

Lisa McGovern, business development manager for Graham Beck Wines, says the Escape to the Cape activity fulfils a vital role, helping “the on-trade to feel confident when communicating and/or selling South Africa”. It is an example of the much-needed education beyond consumer level, particularly for a country possibly too well known for its ability to provide entry-level wines. As Catherine Boot of WaverleyTBS confirms, “It’s not what South African producers necessarily want to hear, but entry level is where they are winning in our business.”

Aiming for the top
McGovern, however, believes that South Africa needs a greater premium focus. “South Africa is best placed at £20 and upwards on a gastropub or restaurant wine list,” she says. Drake adds, “Our big challenge is to gain distribution at the premium end of the market.”

For wine director at Matthew Clark, Robin Knapp, however, “Big volume opportunities still exist for cheaper-end fresh Chenin Blanc and Sauvignon Blanc, but there are mid-priced opportunities in South Africa across all regions and producers.”

Chenin Blanc is indeed a major focus, and is produced in quantity in South Africa. As DGB’s on-trade business manager, Alan Platt, says, “If it’s well-made, it makes a good gluggable house wine.” Knapp adds that it will continue to be successful if “there is a continued focus on freshness, quality and improving levels of concentration”.

Oscar Foulkes, commercial director for Cloof, comments, “You’re going to find that it’s easy to make decent-tasting Chenin. But when you get into the higher prices … it’s one of those things that’s been talked about for the last 15 years, and I’m not sure that even in South Africa people are willing to pay for that top-end Chenin Blanc. But the more workhorse ones – they’re probably going to win more friends.” McGovern agrees: “In the immediate future, consumers will continue to pay a premium for Sauvignon Blanc that Chenin Blanc has yet to achieve.”

Simon Farr, Bibendum’s deputy chairman, comments, “Chenin Blanc has a broad spectrum of flavours and can go around the table no matter what you’re eating.” The issue of food-friendliness is particularly prevalent when targeting the on-trade.

For McGovern this is also an education issue. “As producers, it is up to us to demonstrate how our wines can and do complement a range of international cuisine.”

For Knapp, “South African reds may be seen as too heavy for food, although this is incorrect. Pinotage, for example, is seen as a bit of a ‘brute’ and, as such, not complementary to food.”

Foulkes has a different take on this: “People perhaps make too much of this notion of food-friendliness. It’s not that a wine isn’t food friendly – it just depends on what you’re going to eat with it. Those horribly simple sweet wines churned out by some producers – they’re not food-friendly, but they’re not necessarily drinking-friendly either.”

The on-trade wine market is not all about food and wine pairing, however. The on-trade presents a distinct set of challenges and opportunities or, as Farr says, “It has a different spin on it.”

Specifically, he explains, it is “a great place to introduce people to new things”.

In terms of wineries producing smaller volumes, the on-trade presents another advantage. “If there was more of an open mind on the part of people buying wine all the way down the chain, they’d find that there are a lot of exciting wines in South Africa that can fit that gap – the ones that are too small in production to go into retail.”

There are significant volumes to be had in the on-trade, but this is almost exclusively at the lower-priced end of the spectrum. Platt explains, “A single pub or any other on-trade outlet is not going to have 12 house wines, each from different countries. If a big chain decided to select a South African wine for their house wine, the impact for the market would be huge.”


South African wine does have a few distinguishing features in addition to its striking winelands to help it stand out on a wine list. A major one, often controversial, and almost entirely exclusive to South Africa, is the Pinotage grape.

DGB’s on-trade business manager Alan Platt says, “If you’ve read the press in the last 18 months, you’d have heard about the death of Pinotage, but I’ve seen precisely the reverse. I’ve seen sales go ballistic in the on-trade.”

Pinotage is a varietal that inspires sweeping generalisations, as well as a small, loyal following. Simon Farr of Bibendum explains, “Its problem is that it’s very difficult to understand what Pinotage should taste like.”

Cloof’s Oscar Foulkes believes, “There is an instant wine list spot for Pinotage.” He believes that agencies with a significant portfolio that are providing the majority of a wine list are in a good position to suggest the addition of a Pinotage to a restaurant’s list.

Lisa McGovern of Graham Beck wines comments that, “South Africa can and should highlight its indigenous wines like Pinotage, as it offers a point of difference,” but adds that, “More importantly, and in line with current planting trends, we need to communicate the strengths and styles of Shiraz/Syrah and Cabernet Sauvignon grown in the Cape.”

As with a number of other countries and varietals, the burden of responsibility falls once again on the ever-rising rosé. As Platt explains, “We’re introducing a Pinotage rosé. We hope it helps to promote Pinotage, because it’s had a tough time. There are a lot of companies now producing Pinotage rosé – a style of rosé unique to South Africa.”

As a distinctive point of difference for the country, efforts with Pinotage seem likely to continue, as will the polarised opinions about the controversial grape.

No middle ground
There is, of course, a negative side to this end of the market. As Foulkes says, “A lot of the on-trade business seems to want to buy house wines in at £3 or less, duty-paid, and you’re not going to get interesting wines at that price point.”

Another potential pitfall of focusing on the lower value, high-volume end of the market is that it does little to develop aspects of the category such as regionality and diversity, themes that South Africa is keen to encourage. As Distell Europe’s managing director Gary Greenfield says, “We know the trade and consumers are especially interested in the diversity and quality of wines from South Africa. There is a real heritage and quality available.”

McGovern believes, however, “It will take time to build awareness of South Africa’s strengths and also an awareness of regional diversity, which is still relatively unknown.” The result – and South Africa is not alone in this – is a distinct split between the attention paid to mass market and premium wines, with little success in the difficult but lucrative middle-priced bracket. As Farr describes it, “South African wine seems to go either one way or another – either downmarket, commodity bulk wine or they go ‘We’re going to beat Lafite at what it does.’ Without the middle ground, no wonder South African fine wine doesn’t exist on Nielsen.”

Platt agrees: “The market is polarised between the two – there’s entry level and really premium stuff.” He believes that there is potential in the pub trade, at the £25-£30 mark. For Foulkes, the price can be lower. “Pinotage appears at £22-£25 per bottle, but we could do £15 per bottle on the list. That way, we’re doing okay, the customer’s getting a reasonable glass of wine, and the restaurant’s doing okay.”

At this price point, a number of countries are looking to capitalise on another opportunity. There has been significant speculation about price increases from Australia after a reduced harvest this year. Drake believes, “There is an opportunity for Chenin Blanc to become the house wine or entry tier in pubs and casual dining restaurants as Australian wines increase in price due to the 2007 vintage condition.”

Boot at WaverleyTBS adds, “Clearly in a market in slow growth at best, to increase their market share they need to steal from elsewhere, like the Old World, or Australia if price increases with the low 2007 harvest.”

The future’s pink
There is a current trend that presents an opportunity for South Africa, particularly in the on-trade. Platt believes that, “In part, rosé will be the saviour – it will help growth. South Africa is capitalising on rosé across all styles. We’ve been innovative in introducing sweeter styles, not like white Zin, but not as dry as French rosés.” He mentions Gallo’s new marketing of rosé over ice in on-trade venues, saying, “In South Africa, people have been drinking Chenin over ice for years.”

If these opportunities are taken advantage of, there is undoubtedly a place for South African wine in the UK on-trade at a variety of price points and in numerous styles. Given its current small presence, there is really only room for improvement.

© db June 2007

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