Cape wine exporters target US market growth

Promotional spend on a par with UK RAY SMUTS HUGELY ENCOURAGED by a 59% year-on-year growth of Cape wines to the US and a much heightened interest by its leading importers, Wines of South Africa - international marketing representative of the South African Wine and Brandy Company - is about to take on what is set to become the world’s biggest wine market by 2008. That is when US wine sales are expected to increase to 3.69 billion bottles, with annual per capita consumption increasing to 17.5 bottles a year, a growth of three bottles a year since 2005. Back from a recent trip to New York where she met with US importers of Cape wines, Wosa CEO Su Birch confirms the organisation will be allocating the same promotional spend to the US as it does to the UK, this country’s largest export destination, currently accounting for 46% of total packaged export volumes. This is ten times the volumes exported to the US. “We were very encouraged by the groundswell of support shown by all the major importers of South African wines, who are tremendously excited by our quality, our position and our price:value ratios,” says Birch. US-allocated funds will 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 DC, followed by the secondary markets of Florida, Chicago, Texas and California. Also included in the campaign are visits by carefully selected wine, travel and leisure media to the Cape winelands. Last year, US wine consumption totalled 278 million nine-litre cases of which imports accounted for 26% of sales, reaching a record level of 72 million cases. An international wine study now projects that total wine sales volumes in the US will increase to 410 million cases by 2008, valued at US$24 billion. Says Birch: “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 with which to access a broader market in the retail price segment of US$8 a bottle and upwards. The US$6-US$9 retail sector accounted for 51% of imported wine sales in the US last year. Birch cautions that the complexity of the three-tier US market, which directly precludes direct purchasing by retailers from suppliers, demanding the involvement of an intermediary wholesaler or distributor, means that penetration of the market will require sound planning by producers and a long-term investment.