OBG talks to Su Birch, CEO, Wines of South Africa

Interview: Su Birch

To what extent is there room for additional government support in the wine industry?

SU BIRCH: In terms of government negotiated excise and duties, we have a 46m-litre duty free agreement with the EU, which is obviously a plus. Compared with some of our wine-producing competitors, such as Australia and the EU, the South African wine industry is disproportionally less funded by government.

In fact, our wine industry receives hardly any financial support. The infrastructure and wine tourism development on individual wine farms is all through private investment. And while there are some financial support schemes for trade missions, this pales in comparison to the investments by other governments that offer, for example, financing for viticultural development and generic marketing. The government has, however, indicated its intention to put in place a plan for job creation in order to sustain the industry’s long-term development, which is encouraging.

How can South Africa move towards selling wine in bulk, and bottling and labelling it at destination?

BIRCH: The increasing trend to export in bulk is a structural change in the global wine industry and will most likely not go away. It is a reality for all exporting countries, even small and specialised exporters. Exporting in bulk and bottling “in-country” is currently proving to be more profitable for importers. And the trend will only change, for South Africa, if the exchange rate weakens significantly to where it will become more profitable to bottle domestically again. The concern for everybody is job losses on the bottling lines. However, as a prominent UK retailer commented, “Stay competitive or you will face job losses on the farms as well.” In other words, stay in business or the entire industry collapses.

What can be done to boost consumption of South African wines elsewhere in Africa?

BIRCH: At this stage we are mainly targeting Angola, a key market that has shown growth and is currently our largest export market on the continent, followed by Nigeria. We have also seen steady growth in Kenya, in areas of the East African market like Tanzania and Zambia, and in markets such as Uganda.

We have already started the task of educating consumers in non-traditional markets about the quality of South African wines through wine-tasting events hosted annually in different destinations, and we have also partnered with other South African businesses and stakeholders in a collective approach to fast track the visibility of Brand South Africa in these markets. We plan to increase the frequency of these events to remain current in the mind of the consumer.

How important are considerations of ethical trade and environmentally sustainable production?

BIRCH: South Africa is internationally recognised for producing wine responsibly, both environmentally and socially. This creates a unique selling proposition, which at this stage is not so much demanded by the end consumer, as it is with the international buyers.

It definitely helps to have accreditation in times when there is international focus on South Africa related to social issues, such as the recent Human Rights Watch report. We also have the most Fairtrade labels of all wine-producing countries, and 68% of all Fairtrade wine sold globally is, in fact, from South Africa.

How can wine tourism realise its full potential?

BIRCH: Cape Town-Cape Winelands is a member of the Great Wine Capitals Global Network, which acknowledges our wine tourism offerings’ excellence. Our winelands are generally acknowledged as a sought-after wine-tourism destination, with a combination of cultural, architectural, dining and accommodation experiences. In terms of improvement, service is always an element that needs constant attention. Cooperation and coordination between various tourism bodies and the authorities is also lacking. If this is successfully addressed, it will lead to more efficient destination marketing.