SA poised to capitalise on the growing US wine market

Speaking on her return earlier in February from a meeting in New York with US importers of Cape wines, WOSA CEO, Su Birch, confirmed that this year, the organisation would be allocating the same promotional spend on the US as it dedicates to the UK. The UK is the country's biggest export destination and currently accounts for 46% of total packaged export volumes, 10 times the current volume exported to the US.

"We were very encouraged by the groundswell of support shown by all the major importers of South African wines, whose top representatives flew into New York for our recent meeting from as far afield as Florida, Los Angeles, Chicago and across the Atlantic to learn more about our offerings and our plans to build visibility. They are tremendously excited by our quality, our positioning and our price:value ratios. The level of enthusiasm they have expressed is ample indication of the growing respect for South Africa as a wine producing country."

Funds in the US, said Birch, would be directed at raising South Africa's visibility at trade and consumer shows, through retail and on-consumption drives in the primary markets along the Eastern seaboard of New York, Boston and Washington, and then in the secondary markets of Florida, Chicago, Texas and California. The campaign would also include visits by carefully selected wine, travel and leisure media to the Cape winelands.

Last year, US wine consumption totalled 278 million 9 litre cases, according to wine market specialist Jon Fredrikson of Gomberg, Fredrikson & Associates. Imports accounted for 26% of sales, reaching a record level of 72 million cases. Now an international wine market study projects that total wine sales volumes in the US will increase to 410 million cases by 2008, valued at US$24bn.

South Africa currently has 2.6% of the New World volume share, worth US$30m. Sales have been climbing rapidly, moving from less than 500 000 cases in 2003 to over 700 000 last year.

"Although our US sales figures are obviously small when compared with those to the UK, they are focused on higher price segments. We are building a small but nevertheless significant reputation in the premium sector that provides us with a springboard from which to access a broader market in the retail price segment of US$8 a bottle and upwards. Our strategy targets a vast spectrum of wine drinkers, from those with a high level of involvement in wine to those who just enjoy it as their beverage of choice."

Last year the US$6 to $9 retail segment accounted for 51% of imported wine retail sales.

Birch cautioned that the complexity of the three-tier US market, which generally precluded direct purchasing by retailers from suppliers and demanded the involvement of an intermediary wholesaler or distributor, meant that penetration of the market would require sound planning by producers, and a long-term investment.

In stark contrast to the declining sales of French and Italian wines, New World wine sales to the US are soaring, with Australia still very much in the lead, accounting for 68% of total New World wine sales, followed by Chile with 20%.

"There is a growing appreciation for New World wines, the fastest growing segment of the imported wine category and retailers are looking to see who will succeed Australia. Now is the time to capitalise on this interest, as some South African producers are already doing with very pleasing results thus far.

"Chardonnay and Merlot remain the most popular varietals in the US, while Cabernet Sauvignon and Sauvignon Blanc also enjoy strong support. We are well placed to service demand in these segments, as well as more broadly, with our Shiraz and blended wines," said Birch.

Last year, South Africa exported a total of 266.5 million litres worldwide, a 12% volume increase on 2003, despite the robust rand and aggressive competition prompted by a global oversupply. In addition to the US, other high-growth destinations were The Netherlands, which grew by 18%, Germany (34%), Sweden (31%) and Canada (40%).