The Wine Industry Strategic Exercise (Wise) is changing the wine and brandy landscape to assure a sustainably future for a robust, adaptable and competitive industry.
WHY WISE?
The wine and brandy industry – which comprises the total value-chain of the brandy and distillates sector, the grapebased products sector, as well as other secondary source of income to the industry, such as wine tourism – required a comprehensive, industry-wide strategy to reach a desirable future state by 2025.
Driven by key industry organisations VinPro, Salba, Sawis, Wosa and Winetech, questions were asked about transformation, profitability, market share and government support. Following an analyses of relevant literature and feedback from the wine and brandy industry, six work streams, which cover key aspects for development, were identified. Hereafter industry stakeholders were appointed onto these work streams and tasked to investigate their specific area in terms of the current state in the industry, as well as the future ideal.
These six work streams in turn identified 10 projects that aim to enable a conducive environment for business, of which six were identified as the game-changers for the South African wine landscape.
According to Van Loveren CEO and wise task team member, Phillip Retief, Wise could not have come at a better time. “This initiative makes me excited. It gives us a good framework for the industry to reflect, rethink and plan ahead.”
This sentiment is shared by Origin Wine CEO, Neville Carew: “The success of this industry in generations to come is dependent on the success of this new platform in terms of managing our industry.”
TIME TO ACTION
The information provided by Wise is designed to enable individual wineries to operate more efficiently and profitable. Similarly, industry business units (VinPro, Wosa, Salba, Sawis and Winetech) are able to focus on priorities and work towards a communal goal.
According to First Cape chairman Jacques Naudé, “Every business needs a business plan. You have to do long term planning to be competitive, successful and sustainable. This is exactly what Wise did.”
VinPro managing director, Rico Basson explains that whether it’s local market research or the re-engineering of technical research and development, the Wise process has provided useful resources and it’s now up to the industry to use this.
“In 12 month’s time, Wise projects will have been incorporated into different business units and it’s the industry’s prerogative to apply what Wise has provided in day to day business. It could be argued that Wise has largely removed potential barriers to success. Now individual wine businesses should take the baton and run with it.”
Rico adds that Wise has provided a future roadmap for the industry – not only in terms of strategic direction, but also investment. “We have set goals and targets and now the industry needs to pull in the same direction to make it happen. Accountability comes into play in the execution of a plan and this next phase is crucially important,” highlights Basson.
WISE DELIVERABLES
- FORMALISING THE GLOBAL TRADE AGENDA
The objective of this project was to build a customised model for market opportunities for South African wine, explore the most important individual markets in more depth and support the dissemination of insight to stakeholders. The focus markets are China, Africa and the USA. This aims to complement the strategic framework of the generic export promotion body, Wines of South Africa (Wosa).
Supply chains, wine styles, ethical trade, profitability and the ratio between packaged and bulk wine are at the top of the global agenda, while this project also includes the analysis of non-tariff barriers, as well as setting the trade agenda for Government engagement in key markets. As part of this alignment, Michael Mokoro – now based at the Agbiz offices in Gauteng – was appointed as the wine industry’s stakeholder manager.
Research conducted by Wine Intelligence about the Chinese market – specifically with a South African perspective was presented at a seminar in in September 2014.
Know the Chinese market:
South African exports to China doubled in 2015
Easy drinking reds and sparkling wines hold the greatest potential.
NEXT STEPS: Wine Intelligence and WOSA will unpack the research and market feedback about the Africa and USA markets in detail at a seminar on Monday 8 February 2016 at Stellenrust Wine Estate. “The entire industry is now collectively addressing key issues in a collaborative way,” says Wosa CEO, Siobhan Thompson. “This concerted effort sees the wine industry standing together and that is what makes Wise such an exciting initiative.”
- TECHNOLOGICAL INNOVATION
A report was compiled to outline the technology and innovation imperatives for the South African wine industry. This strategic framework for technology and innovation should create a platform for enablement across the industry and entails the re-engineering of Winetech.
According to the independent consultant tasked with this project, Ian Dean, the ultimate value of Wise will depend not so much on the ideas but how they are implemented. “If Wise gets the team right, chances are they’ll get the ideas right and make a substantial contribution to shaping the future of the wine industry,” comments Dean.
- PROMOTING BRAND SA
The objective here is to re-energise and revitalise the local wine market by raising the status of the category within the broader alcohol offering.
Research conducted by The Moss Group and Consumer Insights Agency (CIA) highlights that the majority of South Africans do not associate themselves with wine and are often intimidated by it. By segmenting different consumer profiles, they propose practical steps to sustainably grow the wine category locally.
A Brand SA Local Marketing session, presented in Stellenbosch in November 2015, was attended by some of the top marketing minds in the industry. Another similar session has been scheduled for March 2016.
DEVELOPING THE DOMESTIC MARKET
The Wise task team has set a target of responsibly growing the domestic wine market by 100 million litres by 2025. This growth from the current figure of about 325 million litres would significantly impact the entire industry, but is deemed quite possible with a targeted, collaborative strategy.
The Moss Group was involved in a similar exercise for the whisky industry, which has shown double digit growth in recent years.
- TAKING TOURISM FORWARD
A strategy for wine tourism aims to shift from the “as is” to the “to be” state, by first gaining a thorough understanding of the current wine tourism industry and then making projections of where the industry wants to go.
According to the respected Robertson wine producer and personality, Danie de Wet of De Wetshof, “Wise will affect all of us in the industry. For me our image as a country, the image of our products and our region is of utmost importance. We have to up our game and share an image that will attract international tourism and one that will help us to offer our product with proud to the world market. Then only will everything that is so needed for this industry to prosper, fall in place and be an advantage to us.“
NEXT STEPS: The Wise tourism plan will come to fruition at a tourism indaba, where research and the future direction will be presented. This event will take place early in 2016 and further details will be communicated in due course.
- ESTABLISHING A TRANSFORMATION PLAN FOR THE INDUSTRY
For real transformation to take place in the wine industry, proper research had to be conducted on compliance levels of wine value chain players. The next step was to compile a comprehensive transformation plan for the wine value chain, indicating intent, quantifying timelines and targets.
“This attempt by the industry to develop a strategy to address the needs of the three major stakeholders in industry, Government, industry and labour, is fundamental,” says CEO of the South African Liquor Brand Owners Association (Salba), Kurt Moore.
“We have the strategy in place now, but the success will depend on our implementation of it. We need to address the concerns of government and labour. Of course we in the industry would like to see our market share grow. We also want access to new markets internationally, but we have to address transformation, working conditions of the labour market and social issues around alcohol abuse first. Then our initiative will be sustainable in the long term.”
- SEALING THE WISE ENVELOPE
Considered as the envelope that ties together Wise, a social compact is an agreement among the members of an organised society or between the people and the government, which covers a specific topic. This will be achieved through multi-stakeholder roundtable discussions about the key Wise work streams.
The compact has the right to secure mutual protection and welfare or to regulate the relations among members. Because the agreement is a contract, each party to the contract is granted certain rights, but also bears certain responsibilities. In the case of the Wine Social Compact the parties involved are Industry, Government, Labour and Civil Society.
For more information, visit the wine industry portal at www.winesouthafrica.info. Wise documentation is only available to registered Sawis members.