A major study has been undertaken to establish how wine exporters can gain positive advantage through production efficiencies to counter the negative impact of the stronger rand. David Mawer, UK-based business development director of wine logistics specialist FFG Hillebrand, offers his perspective. Supply chain tools shorten lead times for wine exporters Riding the wave of New World wine growth into the UK JOY ORLEK SOUTH AFRICA continues to ride the wave of ‘New World’ wine growth into the UK. And while the explosive 20-25% growth recorded in 2001/2 slowed to 6% last year, it’s still a market of huge potential. That’s the view of David Mawer, UK-based business development director of global beverage logistics company FFG Hillebrand, who told FTW in London recently that South Africa still had a considerable strategic edge over its New World competitors, although the stronger currency has taken its toll. “In order to overcome the strength of the rand, a major study has been undertaken in South Africa looking at costs of production in order to establish where wine exporters can gain some positive advantage through production efficiencies,” says Mawer. “South Africa has, to an extent, been cushioned by the weak rand which made the product competitive without having to think too much about cost management. Now wine exporters are waking up to the fact they need to look at costs because revenues are not increasing.” According to Mawer the wine market from South Africa has been growing at a very healthy rate, probably exceeding 20% per annum. “Total SA production is 500m litres a year of which 200m litres is exported. The biggest market is the UK, representing 50% or 100m litres, and it’s all part of the trend which began in the mid 90s towards New World wines. “You saw the shift from the traditional European wine-growing areas led by Australia and the US (California). And while most of the large wine consuming countries in the world have their own production and tend to support it, the UK doesn’t produce wine in any meaningful quantities.” In addition, research reveals that the UK’s traditional image as a beer drinking nation is fading. More wine is consumed at home in terms of volume, although at pubs and clubs beer is still the favourite tipple. But tapping into the market demands an understanding of its priorities. In the UK the key for retailers is availability, says Mawer, and our role is to ensure that the retailer gets his supplies on time, because they’re all trying not to hold too much stock. “Traditionally the supply chain from South Africa has not been the most reliable. "Elements like port congestion and schedule reliability are out of our control. In addition, suppliers are often living hand to mouth, producing to order. This lengthens the lead times, and when you’re working like that in a growing and emerging market you have problems of unreliability.” This is where JF Hillebrand has come up with some answers, working with the suppliers and particularly the local customs authority. The company recently developed sophisticated supply chain management tools, using computer technology to enable various parties in the supply chain to share information more efficiently. “Like the retailer sharing its sales and forecast information with the agent or the supplier and helping suppliers to use that information to optimise their production costs,” says Mawer. “We’ve worked closely with the UK off-licence specialist Thresher Group developing a sophisticated supply chain solution for them. Although this is a worldwide solution, it was first trialled on the South African trade lane.” Also central to a reliable supply chain is availability of seafreight space. “JF Hillebrand has secured long term partnerships with the steamship lines serving South Africa to North Europe routes, including conference carriers as well as independents.” says Mawer. “Within the conference Safmarine has proven to be a reliable partner in terms of space and equipment availability, and that’s vital to ensure an unbroken supply chain.”
