Wine exporters can beat stronger rand with brand

Ray Smuts THE FUTURE of South Africa’s wine export industry could be at risk if producers price their product according to the vagaries of currency fluctuations rather than concentrate on being competitive in value terms. This cautionary comes from Peter Hafner, recently appointed global marketing manager for wines in the Distell portfolio. Proclaiming that a stronger rand can be beaten with brands, Hafner says South African wine producers, many of whom discounted on the back of a weakening rand, should avoid eroding margins as a way of countering the currently stronger rand. “Reducing margins as a key strategy in securing trade is not a sustainable way of conducting business. “Our focus should be on building brand awareness and loyalty. If we swell market share by aggressive discounting we reduce the value of our brands. “Moreover, consumers begin to perceive promotional prices as the norm and when the brands return to their real price levels they move on to the next discounted wine.” Distell is intent on protecting its brands across the price spectrum by providing value through quality, positioning and delivery service irrespective of the value of the rand relative to major currencies. While flexibility in negotiations is certainly necessary, price alone is not a sufficient point of difference in the increasingly competitive wine arena. As things currently stand, the average retail price for a 750ml bottle of South African wine sold in the UK is £3,60 compared with £3,86 for Chile, £4,05 pounds for the US and £4,35 pounds for Australia. Hafner says although higher than Italy and Germany, the South African national average in the UK retail sphere is “less than ideal, but by servicing foreign growth markets with well articulated and clearly positioned brands we can defend our margins and develop long-term business strategies in the face of increasing competition.”