Retail Marketing News South Africa

SA's wine industry warned of risky strategy

Productivity SA, a public sector entity created to enhance SA's competitiveness in the global market, has singled out the wine industry as a sector that could be assisted with the development of a clustering strategy.

Earlier this week, Ernst Janovsky, Absa's general manager for agribusiness, said clusters were "worth considering" as this "may improve marketing efficiencies".

"Clusters are geographic concentrations of interconnected companies, specialised suppliers, service providers, and associated institutions in a particular field that are present in a nation or region," according to Harvard University's Institute for Strategy and Competitiveness.

Janovsky however cautioned that, within the South African context, clustering "could be to the detriment of the industry in terms of quality".

"If you divorce the customer from the producer market, (it) creates a production-orientated industry rather than a market-driven industry and that is not sustainable for the whole industry," Janovsky said.

Exports

Last year the South African wine industry exported 400-million litres abroad.

Recently, South African wine has overtaken France for the first time in the UK market as the product of choice, according to research firm AC Nielsen.

The South African Wine Council estimates that the wine industry contributes about R16bn a year to SA's gross domestic product, employing about 300000 people in the Northern and Western Cape.

The council said that SA produced 3.4% of the world's wine and ranked eighth in overall volume production.

Sello Mosai, an executive manager for value chain competitiveness at Productivity SA, said that the "quality of our wine is one of the best in the world".

Cluster benefits

Mosai said that if wine companies adopted a cluster approach they could benefit more from a uniform marketing strategy, an improved wine specification methodology, economies of scale and innovative research and development activities.

A consultant from Spain, Albert Sole, said that SA should learn from Chile in its quest to develop productive wine clusters. Chile is one of the leading developing country wine producers and has penetrated the international market with its products.

Wines of SA spokesman Jo Wehring disagreed with Mosai's contention that the wine industry was not operating in a unit. Wehring said that his organisation, which also represented wine-producing estates, marketed and exported their wines abroad under one umbrella to maximise exposure and profits.

Source: Business Day

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