It’s always good to journey to a country that you think you know and then have your eyes peeled back like a banana skin. In October I spent a whirlwind 10 days in the USA; Los Angeles, San Francisco, Napa, St Helena, Sonoma, Boston, and Connecticut. Not good for my body, let alone my credit card! The most important learning of this business trip was that the lingering suspicions and half truths concerning the South African wine category in the USA that I picked up last year on a brief New York / New Jersey trip were categorically confirmed. Before I trumpet alleged pearls of wisdom, let me say that when it comes to selling South African wine in the USA, Cape Classics appear to be doing an excellent if lonely job. Time and time again I came across brands that this company represents standing alone like lost soldiers, valiantly flying the South African flag where none other was to be found.
I started my trip with two days in and around Orange County, and Laguna / Long Beach in Southern California. Orange County is the 6th most populous county in the USA and renowned for both its wealth and conservatism; a reason why so many S’affers call it home? The point of starting here was that a colleague, very well versed in the SA wine category, had put together two days of store visits in the surrounding area, from corner shops to Costco, Trader Joes, Wholefoods Market, Safeways, CVS (yes even drug stores sell wine), Target, Totalwine, BevMo, and many more. I was seeing the USA wine sales category stripped bare.
Well, to be blunt, and to confirm my lingering suspicions, there is no South African wine category to speak of, well not in these stores at least. Critics may argue that of course there isn’t, it’s California stupid. But, ask store managers for South American wines and they show you entire rows of Chilean and Argentinean wines, and not just Malbec and Merlot. Two aisles of Pinot Noirs in a Total Wine outlet had every origin under the sun, bar South Africa. The retailers we spoke to and comments from my colleague after 2 years working the market was that the buyers were very receptive to South African wine, but without a meaningful category, they simply couldn’t afford to waste the shelf space. In short, the category needs to be created by an active drive from the industry. Some South African brand owners like Ken Forrester and the like who know far more about selling wine in the USA than I do, and who spend weeks on the road in the USA, have been banging this drum for years. These views were reinforced as I went through the various towns I visited, as even in St Helena’s Safeway store, the heart of soul almost of the USA wine industry, wines from around the globe were on shelf. The interest from locals in a South African visitor was as it always has been; keen to understand how we view the USA, interested to taste our wines, but sadly under exposed to them at the same time. This is not a marketing issue however, it is a straight forward hard commercial issue; Does the product, at the price point, with all the required and accompanying promotional and supporting elements in place, stack up enough to be put on shelf? If it does, then it will be listed, but it then will be forced to fight for space in the huge maelstrom of wines that exist outside of any category. Care to compete with wines from Georgia (and that’s Europe’s Georgia), then good luck, because that’s where you will end up on shelf.
A study conducted in 2008 by Liz Thach, a professor of Management and Business at Sonoma SU, (A summary of the article can be found here http://www.winebusiness.com), identified that the number one reason to buy a wine in a retail store for USA consumers was prior experience of trying the wine. The next most likely reason was a recommendation from a friend or store employee, and from there down to the various brand markers such as varietal, origin etc. I would suggest that this probably hasn’t changed much in the 3 or 4 years since the research was conducted, and if anything is probably more entrenched due to the current economic worries where trust and value form a vital link in any purchasing decision. Interesting observations can be made when the query moved to reasons to select a wine in a restaurant, and here the WOSA strategy appears correct in that the top three decisions were either based on recommendation, food matching, or the desire to try something new i.e. experiment. WOSA’s recent announcement of the opening a permanent New York office from January next year is a huge step in the right direction, but this office should be tasked with talking to retail buyers as well as following the current practise of converting sommeliers. There is a need to form an alliance with SA brand owners to target retail decision makers into listing mainstream South African brands. It is all well and good talking to sommeliers, but the category needs a starting point from store level up, not the wine list downwards only. This does of course mean that brand owners need to swallow their pride and be prepared to stand alongside their competitors and share best practise. Sound familiar?
It seems to me that the true task at hand is to work out a way to invest available funds into targeting the retail buyers, which must of course also include On Trade retailers. Perhaps a summit of buyers and brand owners/representatives in a central USA location where the only objective is to demonstrate the various components of the South African wine category is the way forward? Leave the consumer shows for now. Can we then develop a tight and efficient program that dissects all relevant to the USA consumer touch points, have strong and learned speakers who are there to learn as well as advise, and throw our arms open and say to the buyers; We are open for business, are happy to tailor our wines to your consumer’s palettes, understand the rules of engagement when it comes to pricing and promotions, and appreciate the need to populate your aisles with South African accents. Have the Chenin Blanc Association, SBIG, regional groups etc. come and pour their wines and tell the buyers why we think we have advantages over other countries. On the Chenin Blanc side by the way, almost every wine professional I met talked about South Africa’s Chenin Blanc advantage and asked when they would be able to find these wines readily available. Conversely and rather sadly (some may say), Pinotage was less enthusiastically welcomed as an intrinsically South African expression. Well that’s the challenge, are we up for it as brand owners?
South African brand owners also need to embrace the USA ability to execute retail in all its formats. The USA just gets retail. Almost every outlet I visited of a size larger than your local Spar had a wine tasting area, listing wine activities that were occurring, and for wines from all over the world. Couple this with many of the stores engaging in interactive displays and engaging sales staff on every level, it is clear that the US consumer expects an experience when shopping. Interaction with consumers requires investment in shoe leather at the very least, and time in stores clearly. South African brand owners also have some way to go on the design and packaging front as well, perhaps a nod to our Calvinistic backgrounds? The USA retail space demands colourful and inventive labels on shelf of whatever ilk – be it cereal, wine, or cheeses. The vast majority of wine labels on shelf on all levels are clever design, not smart, but well thought out and meaningfully designed wine labels that tell an interesting and engaging story. The story goes well beyond the date when the family founded the farm and how many generations had worked there, but seeks to convey a sense of place first and foremost, and the reason why they are engaging with consumers second. The fundamental issue that came up time and again in conversation was what would they experience when travelling to South Africa, figuratively when it comes to drinking the wines, and literally when asked about visiting our shores? This may of course not appeal to the traditionalists in the wine world where the expectation is that you experience what I tell you to, but for many US consumers at least, it seems that this is the chief reason why they choose to engage with a brand.
There is clearly an opportunity to be grasped by having a punchier, focussed and singularly commercial approach to doing business in the USA, but we must do business together as a category because at the moment there are only a few lone rangers out there and they are hugely overexposed and crying out for help.