Attacking America

Wednesday, 25 August, 2010
Neil Pendock
Neil Pendock questions the wisdom of launching icon wines at the well-defended American market.
When WOSA (Wines of SA, the exporters' mouthpiece) showcased SA to US wine educators at the end of July, the bottles offered had one thing in common: big price tags. Icons like Vergelegen V, Waterford The Jem, Kanonkop Paul Sauer and FMC Chenin Blanc are some of the priciest bottles in the SA cellar. In this Age of Austerity, are these really the best ambassadors for SA? And if the educators rely on price to make a judgment, is this really the optimal forum to promote SA wine?

Likewise, when that herd of hedonistic sacred cows (aka foreign wine hacks) are seduced to SA with tasty carrots in the shape of business class jollies with sleepovers in five star hotels, rounds of golf and shark cage diving experiences, when it comes to food and wine, only the best passes those sacred lips. Yet when they get home, if they report (not always a given), it is often more affordable brands that are recommended to a diminishing pool of readers who actually have to buy the stuff.

SA is not alone in focusing on the treacherous top-end of the market. The Australian Wine and Brandy Company has been one of the most successful generic promoters. Yet their top-end strategy is starting to unravel, as Blair Speedy reported in The Australian earlier this month.

In a story entitled "Posh plonk hasn't made a splash in the US," Blair reports that back in 2007, Aussies resolved "to improve profitability by moving away from plonk to high-end wines sold at a premium price. This was because they were faced with a billion-litre lake of unsold wine and increasing competition in key export markets from cheaper 'new world' producers." Like South Africa.

So did it work? In a word, no. "Over the past financial year, Australian wine exports to the US have fallen by 3 per cent to 156 million litres. Of even more concern to those hoping to push Aussie wine into the premium market, exports by value have shrunk even faster, down 14 per cent to $571 million as the average price per litre of wine declined by 11.8 per cent to just $3.66. Of the 208 million bottles of Australian wine sold in the US last financial year, less than 2 per cent were sold at a price equivalent to more than $10 a litre."

To be fair, Aussie marketers were not the only ones to fail to see the Dawn of the Age of Austerity which has seen the world's richest consumers buy down when it comes to yachts, private jets and wine.

Of course the super rich will continue to snap-up top end tipples, as the outrageous prices asked for en primeur 2009 Bordeaux, confirm. But this is just further affirmation of the economic polarization of society which will surely end in a revolution that will make Robespierre look like Simon Cowell.

As Edward Luce reported in the Weekend Financial Times earlier this month "the annual incomes of the bottom 90 per cent of US families have been essentially flat since 1973 - having risen by only 10 per cent in real terms over the past 37 years. That means most Americans have been treading water for more than a generation. Over the same period the incomes of the top 1 per cent have tripled. In 1973, chief executives were on average paid 26 times the median income. Now the multiple is above 300."

The challenge for SA generic wine marketers is to offer those Americans treading water, something to drink. Plutocrat chief executives may buy a bottle or two of Pinotage (conspicuous by its absence from the WOSA educators selection) but for the rest, France has an unassailable position in wine fashions, as the Aussies found out.

So what is to be done? Carlen Groenewald, Distell Global Marketing manager (Premium Wines) and Bergkelder cellar master Michael Bucholz organized a tasting of their Two Oceans brand (sales of which are flying in North America) against the international competition, in June. Two Oceans Sauvignon Blanc against Lindemans, Pinot Grigio against Gallo's Barefoot, Rosé against Fuzion from Argentina, Shiraz against Yellowtail, Pinot Noir against Lindemans again, Cabernet against Casillero del Diablo from Chile. Tasters included Tinus van Niekerk, Officier de l'Ordre du Merité Agricole, who blends some serious supermarket wines for Spar and cosmopolitan blogger Clare Mack.

Call it cellar palate if you like, but the Two Oceans dinged my dong in five of the six flights which were tasted blind. As dead-tree publications collapse faster than vuvuzela prices, social media (twitter, facebook, blogs) are the communication medium of the future. While SA wine marketers will quack like foie gras ducks if denied wine dinners in Michelin's finest temples, perhaps a little humility will go a long way in presenting SA wine to the most realistic target market: Americans with declining income mobility.
Carlen Groenewald and Clare Mack
Carlen Groenewald and Clare Mack

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