Dana beats around no bushes

At the eye of the storm raging around export strategies to the all important US market sits Dana Buys, cool as Chardonnay. Dana owns Vrede en Lust in Franschhoekfranschhoekcellarwines Dana beats around no bushes
by franschhoekwines
and is well placed to advise on the financial cataclysm that will soon hit SA producers, having survived the dot.com bust in a previous life.

That it will not be all plain sailing for SA is clear from reports of export meltdowns in Australia with November exports down over 26%. For 2008 as a whole, Aussie exports are down a whopping 11% by volume and 18% by value with sales to the USA down a massive 26%. Today’s Sunday Times interview with Dana was unfortunately truncated for want of space (maybe that’s one way producers could boost wines sales, by advertising in the local media and so boost the number of pages allocated to wine). In fact space was so tight, Dana’s wife Anneke fell off the photo. Here it is uncropped and the interview in full:

dana  anneke buys Dana beats around no bushes

Q: Is the American market worth the effort for SA wine exporters?

A: The US market is rapidly becoming the largest wine market in the world. It is important to note that the average price points are growing as well as the volumes. Last year, wine overtook beer to become the most popular alcoholic beverage in the USA. So Americans are drinking more wine and they are trading up at the same time. This is in stark contrast to some of the more established export markets such as the UK, Benelux and Germany where massive supermarket buying power has sent prices paid to producers tumbling. At present, South African wines do not even have a 1% market share in that important market, so there is significant growth opportunity there for the right quality products at the right price points.

Q: Did Cape Wine 2008 deliver?

A: I can only speak for ourselves and not the industry at large. For us at Vrede en Lust I think it was a waste of time and I would not attend again in its current format. As ‘normal’ producers we did not have any access to who was being flown in by DTI and the industry bodies, which meant that we could not set up any special meetings or events directly with attendees, ahead of time. The bulk of foreign attendees sponsored by DTI came from China and India. That is really a joke as their markets are tiny at present and not very compatible with the SA wine product. E.g. In China the wine market is split mainly into two segments – those who drink expensive and prestigious wines (often with some Coke or Sprite) for status and those who drink very cheap wines in order to get drunk.

The middle market, where South African would play, is yet to develop and this will take many years, as we have seen in the case of Japan. The Indian wine market is very small and fraught with import duties of 200 to 300% depending on which state you export to. This shows the level of disconnection between the government and the producers of South Africa’s largest agricultural export. Whilst there may be good reasons to focus on China and India for other products, wine is not a great match and DTI wasted the taxpayer’s hard earned money!

Q: Have the rules of the game changed in the wake of the subprime economic collapse? John Maynard Keynes famously declared “let goods be homespun.” Shouldn’t SA producers rather stick to their (local) knitting?

A: It is still very early and thus difficult to tell exactly how the current economic crises will impact the wine industry. Overseas early indications are that wine lovers are not drinking less, but are buying more carefully and trying to spend less on a bottle of wine. So US consumers who used to buy a $50 Cabernet is now shopping for a $30 bottle and those who used to buy the $30 bottle is now spending $20 on carefully selected bottle. It is also clear that many consumers are eating out less and buying more wine for home enjoyment.

At Vrede en Lust we have enjoyed record sales since October which may indicate that a lot of people are looking for value and that more are drinking at home, seeing that a lot of our sales are direct. Our focus as a winery has always been on South Africa first and the local market will always be our most important market. That said, South Africa produces a lot more wine than South Africans consume – so exports are a vital part of the industry.

It would be great to see the industry do some proper generic wine marketing, to help grow domestic consumption. Our local enemy is not the winery down the road – it is beer and ‘brandy & Coke’ and some of the other mixers and hard tack out there. Via generic marketing we could educate the local consumer more re the many, well documented, health benefits of responsible wine consumption. The 1991 60-Minutes TV show re the so-called French Paradox, kick-started the strong and enduring growth in US wine sales and a change in lifestyle for many Americans. So yes, we can do a lot more locally!