The Stellenbosch wine region in the Western Cape should seriously consider wine tourism as an option to counter the stranglehold of the stronger rand on wine exports. That’s the view of Dr Johan Bruwer, senior lecturer in Wine Marketing at the University of Adelaide in Australia.
According to Bruwer, the region’s wine is in 60% of cases the reason why the region is visited with one out of every three being overseas visitors. Stellenbosch wine producers should capitalise on the potential of wine tourism, he believes.
Bruwer does market research in 16 different wine regions worldwide including Australia, New Zealand, the US, Chile and South Africa. He recently completed in-depth research on wine tourism in the Stellenbosch region to coincide with the Stellenbosch Wine Festival.
He says that while the rand is weighing heavily on wine exports, producers should look at their businesses as a whole and from a strategic point of view. As an interim measure, it might be necessary to slice exports and in the process channel more production to local wine tourism.
Another option is to try to negotiate higher prices for the export component of wine production, although it might be difficult at this point of time. “As a rule, wine producers have to keep a close watch on the markets and the exchange rate in particular.
“Production can also be slashed. Although it might sound a bit harsh, such a measure will provide enough room for consolidation ‘allowing a sick patient to recover'”.
“A further option is to look for other markets, as there is excessive focus on the UK market. South Africa can do better in the USA market, which is currently much ‘softer’ than the UK market with a higher rate of return. This is also the case with the Canadian market,” he says.
Bruwer is of the opinion that the local market is too fragmented and that the export market can only be embark upon when a brand is properly established locally.
“There are too many South African brand names not achieving the classic annual sales figure of 5 000 cases. This figure is in general the lower threshold needed to enter the American market.” – I-Net Bridge