Thursday, January 27, 2011

Is 2011 really going to be that bad??

Is it really doom and gloom for 2011 and the Wine Industry?

After starting my blog late last year I thought I should try and focus on more positive topic’s, try and stay positive with what I write and not too negative when others might be. However, since the end of 2010 and now early in 2011 it seems that there is a negative vibe everywhere after all the natural disasters, strong rand and prospect for 2011. It is definitely going to be a challenging year, BUT we said the same of 2008 till now and look we have survived…or most did.

The Strong Rand:
My prediction is that the local market will just get more and more difficult to fight for shelf-space, promotional space, spot on a wine list and to get on a consumer’s table. The brands that will struggle the most will be the ones having a much higher ratio of exports compared to local market sales, maybe more for the medium to small producer. If you don’t have a strong presence locally, it is going to need a lot of hard work. Importers are focussed on small or NO price increases, ordering less and cannot commit to any kind of volume purchases for 2011. Therefore I believe that we will see more and more “new” brands entering the local market and fight to find channels to sell through because of the tough conditions internationally.

For the Exporters it will be more important to try and keep fighting for market share even if it will be at lower prices, but once we have lost that the longer it will take to get it back. If you have your eggs in one basket in terms of markets it might cause a lot of problems for you, by spreading your volume over more markets will ensure that you don’t get caught with your pants down if your BIG market slows down. South Africa can still sell good quality at competitive prices and at prices where the consumer buy at in their country. Last year up to 84% of all wines sold in the USA were under $13…
Johnny and Kobus Burger preparing for Harvest 2011

Local Market:
All the doom and gloom of what the clever people say about 2011, might also have a positive spin on the local market. We all know that the market need to grow at a higher rate than around 4-5% (?) to accommodate the growth of the industry. More winemakers, marketers and distributors will start working the streets and look for ways to sell wine. This will expose more people to wine, grow the awareness of wine into all communities and possibly convert consumer into wine drinkers. A sudden urge and energy from the industry being pushed into the market might just wake up people who haven’t really paid attention to what’s going on in the industry.

Although this may sound like something only BIG brands can do, I beg to differ. In any size market there is a place and time for a small producer, they just need to be proactive, energetic and keep knocking on doors. Not necessarily of big retailers, but more on the growing number of wine clubs, wine shows, lifestyle shows etc. If your production is small to medium you can sell everything directly to customers and cut out distributors. Remember the wine shop in your area struggles to compete with big retailers on price, so they want something different that they know the retailers won’t have but that they can comfortably sell to their regulars on recommendation and in such a way also help build your brand.

Without going into more detail with this the fact is that if you really want to make it this year, be proactive don’t wait for someone to take your wine off the shelf, put it in his/her hand. The big brands will always sell more than most, they will always have more brand awareness, but they might also turn people onto wine if they do it right and that means that there will be a growing number of wine drinkers in South Africa.

All in all, I am excited about the year ahead with all its challenges and troubles. Lots of branding, promotional and sales ideas to be put into place. It is going to be a good one…keep following me and hopefully I wont be too far off from what I wrote above!!

Good Luck Everyone.  

Colyn “the leg” Truter
Twitter:           colyntruter