The wine industry is tough. One needs only to visit a local liquor store and be overwhelmed at the product offering to realise what a feat it must be to have your label capture the consumer's attention, and keep it long-term.
South Africa boasts around 1 100 individual wine brands, compared with whisky that only has about 15. This makes wine highly competitive, and wineries require a whole arsenal of tools to keep their product in wine glasses around the country. As a result, the industry is rapidly consolidating, with Vinpro stating that 100 primary producers have been exiting the industry each year since 2003.
The trend is not unique to South Africa as wine countries the world over turn to economies of scale to beat the cost-price squeeze. "Europe has always been the biggest consumer of wine, but that has changed," says Phillip Retief, CEO of Van Loveren Vineyards (VRL), in Robertson in the Western Cape. "Their population is ageing and the younger generation, which is more health conscious, drinks less and enjoys alternative products to their parents. Despite consolidation in the global industry, wine production is actually increasing, which means that in most years there is more supply than demand."
FAST FACTS
Van Loveren Vineyards has gone from strength to strength while many wine farmers are exiting the industry.
Vertical integration has been key to their success.
Good relationships form the basis of negotiations.
SPOTTING OPPORTUNITIES
VRL has been making wine since 1937, with the Retief family building the business into the successful company it is today. Today the third generation is at the helm, comprising brothers Hennie and Bussell, and Phillip and Neil. Together they are the famous four cousins, whose faces adorn the label of their most popular wine.
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