South Africa has gained a reputation as the value for money Sauvies supplier, but the challenge is to push quality and prices to the next level. 

The Cape winelands is second only to Marlborough, New Zealand, in terms of Sauvignon Blanc plantings, but despite being the fifth most planted cultivar in South Africa, more vines have recently been uprooted than new vineyards planted.

This issue was highlighted by VinPro viticulturist, Conrad Schutte, during the Sauvignon Blanc Interest Group (SBIG) technical seminar, sponsored by FNB, which took place at the end of 2014. While this negative trend has started to show some positive change during 2012/2013, Conrad explained that we are still uprooting more than we are planting.

The growth of Sauvignon Blanc sales is similarly slowing, according to Gavin Dittmar, managing director of Meridian Wine Merchants. “The overall growth of Sauvignon sales is 8.8%, compared to 10.1% for white wines in general. We are seeing a slow-down in on-trade, but an increase in retail due to more home consumption,” he said.

“Within off-trade, the growth of Sauvignon Blanc is lagging behind overall growth in the liquor chain and wholesale sectors, but we have noted the opposite in supermarkets. We have also seen a steady increase in the average retail price of Meridian portfolio wines sold in the trade, with the average price per bottle at R63.

However, the growth is still lagging behind inflation and certain brands could be driving this price.”

Gavin explained that the style of Sauvignon Blanc is key to the price point targeted, with the fruitier/tropical styles getting more volume appeal. “We have also seen a decrease in Sauvignon Blanc blends; it peaked at 17%, but has been declining over the last few years to 12%,” he said.

When considering the top Sauvignon Blancs in retail, Gavin observed that the below R40 range is the key retail price point. “This, while strong brands can do well up to R70 per bottle,” he said. “Activation – such as broadsheets, catalogues, discounts and visibility – also helps to drive volume.”

Price wars

The Drinks Business recently published an article by Lucy Shaw, titled ‘South Africa to ape Marlborough success’. The introduction read: “South African winemakers are seeking to piggyback on the success of Marlborough Sauvignon Blanc with their own cheaper versions of the popular style.”

The article continued to quote Jane Robertson, category development director for Accolade, speaking at a press conference at The Beautiful South tasting. “South African white wines are sexy right now. Consumers who have bought into the Marlborough Sauvignon Blanc brand are now looking elsewhere for a similar style of Sauvignon at a more wallet-friendly price point and South Africa can deliver on that front.

“The flavour profile of South African Sauvignon Blanc is similar to Marlborough Sauvignon and can be tailored to fit UK consumers’ taste preferences,” she said.

Comparing Sauvignon Blanc styles of different countries – without taking the individual regions and winemakers into consideration – may appear like a big generalisation, but it is the consumers who have the final say when making their purchasing decisions.

And according to 2013 Nielsen data, UK consumers are willing to pay more for New Zealand wines, with the average price per litre for New Zealand Sauvignon Blanc at £9,19, compared to £7,05 for a litre of South African Sauvignon Blanc.

In an article on Harpers.co.uk, Erin Smith notes, “Sauvignon Blanc continues to be the most popular variety in the UK and no other region is more synonymous with the aromatic grape variety than New Zealand, which continues to make inroads in the UK market”.

Lessons from New Zealand

When it comes to Sauvignon Blanc – and rugby – New Zealand is undoubtedly one of our greatest rivals. Erica Crawford, South Africanborn New Zealander, was a speaker at the SBIG technical seminar and shared some valuable tips on the country’s success.

Erica and winemaker husband, Kim, started the hugely successful Kim Crawford wine brand in Marlborough, New Zealand. From small beginnings, with no vineyards or infrastructure, this virtual winery has grown to become the biggest New Zealand brand in the USA and Canada, and it is now part of Constellation Brands.

For Erica, there are five reasons for New Zealand’s success story. “We have strength in unity. At the beginning, we did tastings together and faced issues together as a country, and while we are starting to see some polarity as the industry grows, the togetherness has really been a key strength. This further led to a successful establishment of ‘Brand New Zealand’.

“Our wines’ flavour profiles, as well as the timing of these wines entering the market, has also been crucial to our success,” she said. “The use of screw caps was another big help and we got a lot of media and trade attention with it. While we had reductivity problems in some of the wines when screw caps were introduced in 2001, we learnt to fine at the right times and around 99% of wine in New Zealand is now under screw cap.”

Selling up

Considering New Zealand Sauvignon Blanc sales in the USA, Erica explained that the country’s biggest positive change has been within the $12 to $14,99 region, with a decrease between $3 and $5,99, as well as $6 and $8,99. “We find that when it comes to Sauvignon Blancs below $10, consumers tend to rather opt for a Chilean or South African bottle,” she said.

While $10 may sound like a lot, it roughly translates to only about R40 to R50 a bottle in South Africa, when taking import duties and taxes into consideration.

This may be great news for value for money offerings – something South Africa has become known for – but isn’t it time we focused more on the higher price categories as well? Selling up and properly marketing our own identity, instead of just selling “cheaper versions of the popular (Marlborough) style”, giving New Zealand producers a proper run for their money.