The explanation behind this curious state of affairs is twofold. On the one hand, there are the reasons illustrated in my previous article. Namely, our country’s thorny past with the wine industry, as well as the particular stigma attached to vino in South Africa. On the other hand, post-1994 South Africa has seen a significant growth in wine exports, which has provided a somewhat profitable market for our wine producers. Producers who now, as a result, no longer solely must rely on the interest of our fading domestic market. In a nutshell, this unique set of circumstances means that for the past decade there has been very little incentive for the wine industry to develop and cater to the domestic market. This, in turn, leads us back to the decline in our per capita wine consumption.
So, what is there to do? I earlier commented that the burning question our wine industry faces is if, and how, wine producers will adapt to South Africa’s new market of black wine consumers. The “if” is debateable, sure. Our wine industry certainly has its share of die-hards, those reluctant to change long-held preconceptions of how wine production should be executed. But whilst this outlook may be understandable by some, the reality is that if wine producers do not acclimatise to the present conditions they will lose out on up to 40% of consumer spending power. Substantial motivation to go back to the drawing board if ever there was one.
But let us shine some light on the positive. Charlaine Opperman, author of a 2010 report that investigates the marketing of South African wine to the emerging black market, says that the industry and economy definitely stands to benefit from this growing consumer group. “Wine companies that can promote their brands to the black middle class group stand to benefit from an increased market share with more profit, as well as a wider spread of products in the domestic market,” she says in the report, which was written as part of her MBA degree at Stellenbosch University. Job creation, according to Opperman, is yet another advantageous outcome. “Companies would have to expand their production facilities, create new distribution channels, and employ marketing agents to focus on the new market segment. Bigger profits for the wine industry could lead to new innovations and better production facilities that will influence the industry positively.”
So, now that we have the “if” covered, it’s time we move onto the “how”. Specifically, if wine producers choose to adapt to the new black market of wine consumers, how would (or should) they potentially do so?
According to Eion du Toit, a leading ethnographer specialising in consumer trends in the black market, the first hurdle is for wine producers to understand the needs of this new generation of wine drinkers. He explains that after doing extensive market research, it emerged that township residents are being ignored by most wine producers, with the possible exception of Distell. His research also indicates that Nederburg Baronne, Graça and JC le Roux are the red, white and sparkling powerbrands in the townships. Reinforcing this rationale, Marthinus Saunderson, who completed his MBA at the University of Bordeaux Business School, adds that “wine marketers are relying too much on traditional methods to sell their products. Examples are depending on awards such as Veritas, and the winemaker's reputation and personality”. This approach is utilised without understanding the consumer or their decision-making process, he says.
An additional factor that seemed to crop up was the necessity to ensure that wine, as a beverage of choice, was more accessible to the black market. In his research, Saunderson found that black wine consumers were of the mindset that wine requires a certain amount of demystifying; a removing of the elitist complexity that surrounds it. Saunderson suggests that “To demystify wine as a beverage, the industry will have to market wine as more of an easy-drinking beverage, instead of a complex one that must be fully understood to be appreciated".
Another relevant aspect to note, according to du Toit, is that black consumers tend to look more at the overall appearance of the wine when making purchasing decisions. “Packaging is an important aspect of this,” he explains. “To certain of the segments papsak is the most convenient way to purchase wines. In other segments, wine with screw cap tops is deemed as a ‘cheap alternative’ to cork.” Wine labels are also placed under a higher level of scrutiny. “Producers would be wise to include information such as food and wine pairing and usage suggestions, i.e. when to drink these wines. Is it a function or party wine, or an everyday drinking wine?” Alcohol content, says du Toit is another key piece of information for this market. It allows the wine consumer to pace themselves so they do not over-indulge. This is an important part of wine drinking habits, it seems.
From the above, it is evident that the market leaders acquiesce that the new black diamond market is the way forward for the South African wine industry. The moral of the story is that wine brands will need to evolve to keep pace and attract this domestic market.
The last remaining question now is: Has this already been implemented, and if so, have any market players been successful?