South African wines a hit in the UK

2 February 2010

South Africa continues to rank as the fastest-growing wine category in the UK, new data shows, and Wines of SA (Wosa) CEO Su Birch believes exports of packaged wines could grow 10% in volume this year, provided the rand doesn’t strengthen materially.

Sales figures released by AC Nielsen for the UK, South Africa’s biggest wine export destination, show that local wines have increased their volume share of the market from 10.4% in 2008 to 12.3% in 2009.

Although still in fourth place, the country is now virtually on a par with France, which occupies third position with 12.4%, behind Australia and the US.

Supermarket wine sales

Total South African supermarket wines sales grew 24% in volume and 23% in value last year. According to the latest export data from SA Wine Information Systems, South Africa’s packaged wine sales to the UK for the year were up 11% on 2008.

“The most encouraging development of all has been the impressive expansion of South African wine sales at price points of £5 and higher,” Birch said in a statement this week.

“The sale of wines in the category of £5 to £6.99 grew 15% in value. Those retailing for £7 to £9.99 – representing a slightly smaller segment of the market – rose 27% and those above £10 – also a smaller category than the wines selling for £5 – increased by 43%.”

Birch pointed out that it had long been the goal of South African producers to shift away from the extreme value segment in order to ensure the industry’s long-term sustainability.

“That such growth has been achieved despite the severity of the global recession gives us a good measure of confidence in the country’s well-established reputation for providing exciting wines across the pricing continuum,” she added.

“However, we remain concerned by the effect of the economy on profit margins.”

Leading South African brands

Birch said that FirstCape, South Africa’s biggest-volume brand in the UK, had lifted year-on-year sales in 2009 by 73% in value and 80% in volume. Other leading South African brands to have performed exceptionally well included Kumala, Arniston Bay, Two Oceans and KWV.

“We are optimistic the 2010 Fifa World Cup™ will significantly raise exposure for the country and our wines, not only in the UK but across a broad international front as soccer enthusiasts focus on South Africa during the coming months.”

Wosa would also be capitalising on the tournament with soccer-themed promotions in key export markets.

“Judging on last year’s performance in one of the toughest times in modern economic history, coupled with the competitive advantage afforded us by this year’s World Cup, we should be able to maintain the growth trajectory achieved in recent years in established as well as some newer markets.”

Global wine exports

Birch said there had been a year-on-year global volume increase of 7% for South African packaged wine exports in 2009, compared with a drop in bulk sales of 18%, a positive trend in her view.

“It is essential that the country concentrate its efforts on packaged wine sales, simultaneously building brands and Brand South Africa. The drop in the proportion of bulk sales to overall exports marks an important stage in the evolution of our industry.”

Other major markets to record strong growth in packaged South African wine volumes last year were Sweden (18%) and Canada (11%), while the Netherlands, Germany and the US had remained virtually unchanged.

Denmark had shown a 5% drop but this had been partially offset by increases in export volumes to Finland and Norway. Meanwhile Japan, Nigeria, Angola and China had all delivered double-digit growth.

SAinfo reporter

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