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| The Asian growth market for the South African wine industry |
| 03 October 2008 by Magna Carta |
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| There is currently an estimated 20% - 30% year-on-year growth in the Asian wine market according to recent research done, and exciting potential specifically for the South African wine industry as a major global exporter.
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South African winemakers exported more than R3-billion worth of wine in 2006, making the country the eighth largest exporter of the product with an annual production of 700 million litres of wine and approximately 35 million litres of brandy reported, according to the International Trade Probe, a report compiled by the National Agricultural Marketing Association (NAMC).
South African Ambassador to Asia, Griffiths Mandla Memela, recently organised the first South African Wine Festival in Indonesia and Bali in support of this and invited a few key South African wine players who attended and exhibited at the show.
"Indonesia is a very large country with a promising potential of wine connoisseurs. This market is just what South African wine producers are aiming for," said Mr GM Memela during a media press gathering in Jakarta.
"The Asian wine market is an as yet untapped pool of potential South African wine consumers," says Marius Kotze, Marketing and Sales Director for Leopards Leap Wines, one of the wineries at the South African Wine Festival in Asia. "At the forefront of the drive into this region, Leopard's Leap exports to more than 30 countries and is constantly strengthening ties and communications with new regions in order to better relationships and maximise on potential business opportunities. The main reason for their success in international markets is clear, innovation and a clear brand strategy as well as quality that exceeds the price points of the wines."
"Market knowledge and market understanding is very important for these markets. We have to prepare to be patient and a step by step approach is needed. Asian people are very brand conscience and very loyal as well," said Marius.
During the festival one of the activities hosted by the South African Embassy to Indonesia were workshops that were held in the top Indonesian tourist hotels; training waiters and wine stewards in wine etiquette and appreciation of South African wines. Knowledge that will no doubt improve South Africa's standing in the Asian wine market considerably and is something that could be strongly supported by our local wine industry through sending wine stewards to Asia to share their knowledge and experience of local wines.
There are however, serious challenges facing our local industry such as our import/export duties, bureaucracy hampering increased Asian market share, and limited understanding of the Asian culture and lifestyle and how to tailor our marketing for those regions. These are all issues that need to be addressed both by South African wineries as well as the DTI and industry organisations.
China and Hong Kong will, according to research commissioned by Vinexpo, be the eighth biggest wine consumer in the world by 2012, with the latest study of VINEXPO/IWSR stating that by 2011 China's wine consumption will be at 828,000,000 litres per year. This, coupled with the abolishment of wine import taxes for Hong Kong which was announced in February 2008, and which has made Hong Kong the wine trading and distribution hub for Asia, has propelled this market to the forefront of global export with its clear massive sales potential. Catherine Mars from Alcoholic Drinks was quoted as saying that "following the removal of taxes, Hong Kong is set to become the third largest wine trading hub globally, after London and New York".
What then, is required in order to incorporate this Asian market into current and future exports plans and thereby improve our trade relations with this hugely important buying power. Organisations such as WOSA (Wines of South Africa) must focus on Asia in their communication strategies, as well as their more traditional wine markets of Europe and America, but for Asian markets utilising tailored marketing strategies.
Andre Morgenthal, Communications Manager for WOSA, says "this is the reason that it was essential for us to appoint our own Market Manager for Asia and India in the form of Michaela Stander earlier this year. WOSA recognises this region's significance to the local wine industry".
It is also the explanation behind the larger Asian contingent attending Cape Wine 2008, which took place from 23 - 25 September at the Cape Town Convention Centre. The global export trade show is always well attended and generates considerable interest from international wine markets and distribution channels. Until this year though the focus has been on Europe, the United Kingdom, the Netherlands and other large buyers of South African wine, in 2008 this focus is firmly split with Asia included in the mix.
The increased contingent however does not necessarily equate to increased buying power. This is entirely dependent on the buyers attending the show and their respective buying power. This too will be majorly affected by their experience whilst in South Africa.
Regional agents in Asia need to be sourced and appointed by local wineries, considering the language and cultural barriers present, it is imperative for the market to be addressed in a way that is suited specifically to them. Winemakers and marketers also need to actively research the Asian emerging market, and with the Department of Trade and Industry firmly behind the wine industry's expansion there, a noticeable portion of the Asian wine spend could soon be swelling our local wine production and international export channels.
"Local wine brands making the effort to investigate and understand that the Asian market is a unique one, requiring unique marketing and sales techniques, need to be backed by industry body, government etc in order for the efforts not to go unnoticed," says Marius Kotze.
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