South Africa is a renowned wine region globally, with numerous international award-winning wines annually produced here. We have more than 2693 farms where grapes are grown for Wine, 529 wineries and 220 registered for estate farm production. South Africa produced stellar 898 Million1 litres in 2020, which is more than 1.2 billion bottles (750ml) of Wine. The quality of South African Wine is also enjoyed globally, with 65% of our Wine being exported1. South Africa is undoubtedly a wine drinkers paradise.
With the alcohol industry taking a knock in 2020 due to lockdowns, the industry is on a growth spurt again, mainly driven by Off-Trade (retail sales)2. South Africa is a dynamic market in Wine, with the highest long term growth out of Europe, the Middle East and Africa coming from our country3. Inflation was a driver in the performance of Wine over the past two years (2021 vs 2022), with volume growth of 6.8% and value growth of 13.4%2. Over the forecasted period, 2021 – 2026, Wine is seeing a value growth of nearly 12.7%. While Rosé seems to be trending based on marketing and what we have seen globally, it is losing market share in both volume and value, with growth being driven out of Red Wine, in both value and volume, in both the long and the short term.
There have been shifts based on consumer trends speaking to lower/ no alcohol consumption, sulphate-free claims, vegan options and sustainability. These shifts are minor in the overall perspective of total wine consumption. To better understand how customers and consumers consider Wine in South Africa, we did a quantitative study in May 2022 to determine the customer sentiment and what we need to consider to capitalise on the promising future of Wine in South Africa.
In South Africa, Wine consumption per capita is at a surprising 5.3 litres, nearly 1.3 litres up from 20114. More than 53% of the consumers sampled drink Wine either daily or two to three times a week. We have linked the critical drivers of this behaviour to our Proprietary Daymon tool: the Daymon Trend Wheeltm, which we use to navigate the complex environment of consumer behaviour, and aligned the three key pillars to the below
1. Enjoyment (Daymon trend: JOYment)
The enjoyment of Wine is not only for personal consumption, but certainly when entertaining friends and family as a critical driver in our social engagement, especially after the lockdowns due to COVID-19. Of the Customers surveyed, 55% reported buying Wine to serve when entertaining, and 15% indicated that they purchase Wine as gifts.
2. Fitting in (Daymon trend: IDentity)
The social pressures of 'fitting in' are not at a loss, with consumers mentioning that they drink Wine to fit in socially with friends or colleagues. Although it may not be their alcoholic beverage of choice, the elevated perception of Wine in driving status plays a crucial role in their consumption decision.
3. Relaxation (Daymon trend: B-Well)
We associate health and wellness with health-perception driven trends like organic, vegan and sulphate free, based on the physical association with our bodies. However, health speaks to the overall wellness of physical, emotional, and cognitive elements in recent years. It is here where relaxation aligns with wellness, in the habit of healthy quantities of consumption naturally,
From the above, it is clear that there are various ways that consumers look at Wine, each driven by a unique set of behaviours. These behaviours are an indicator of the versatility of Wine, whether it is for consumption, cooking, entertaining or gifting. Retailers and estates need to be aware of these as they approach to hone in on their target customers by understanding their preferences.
The most preferred Wine in the overall category (including dry and sweet wines) is Red Wine (37%), followed by White Wine (35%) and Rosé (28%). The preference for dry Wine was mainly Red Wine (38%), followed by White Wine (26%) and then Rosé (26%). But not just any Red, White or Rosé, South African consumers, as surveyed, had a clear favourite: Dry Wines, with more than 77% preferring dry wines and naturally preferred for either the full-bodied character of red Wine or the crispness associated with dry white Wine.
While there may be critical preferences in certain categories of Wine, there are naturally specific varieties of Wine which consumers prefer. Out of our research, the top chosen wines were.
- Sauvignon Blanc (Dry White - 44%)
- Merlot (Dry Red - 40%)
- Cabernet Sauvignon (Dry Red - 35%)
- Shiraz (Dry Red - 3.6%)
- Chenin Blanc (Dry White - 28%)
Apart from other top favourites, varieties mentioned above were Chardonnay, Pinotage, Pinot Noir, Malbec, Sangiovese, Pinot Grigio and Cabernet Franc, and various red and red white blends. Surprisingly, 3% of customers mentioned that they like all varieties and styles of Wine – as each has a unique characteristic that is appreciated.
Wine is undoubtedly a challenging category to consider. Between styles, varieties and vintages, we need to look at customer segmentation, trade channels, preferred pack formats, and so much more. To ensure our relevance by being customer-centric, we need to consider the customers' key priorities and influencing factors behind their decisions.
Customers were clear in their priorities, with the top three priorities when looking to purchase Wine, was ranked as:
- Preferred varietals (24%)
- Preferred estates (22%),
- Attainable price points (21%)
Customers across all LSMs, are pressured in the current economic climate and are looking to reduce their purchase and consumption of 'little luxuries', Wine being an essential luxury category. It is here where the 4th highest priority Promotions (14%) may be vital in winning Wine. Customers are increasingly looking for promotions, especially in bulk buys from retailers and estates, to make their 'little luxuries' more affordable. Retailers and estates can no longer rely on only their heritage. They need to look at additional metrics to drive value and excitement to customers. The value here is not focused on a low price point, but a price point reflective of the value customers are receiving, where customers have mentioned they are willing to pay a higher price for excellent quality wine. Specific queues such as regionality are also a critical factor, with South Africans preferring to buy local wines.
Influencing factors are the non-tangible considerations we can look at to drive marketing and value to our customers beyond their key priorities. Based on what consumers have mentioned, retailers and estates have a few tactics they can consider. The following attributes were the top 5 factors customers said to influence their purchasing decisions:
1. Wine award labels on the bottle (61.8%)
2. Wine/food pairing information (47.9%)
3. Wine Guide suggestions (e.g., Platter recommendations) (39.6%)
4. Recommendations from a Wine Club (34.7%)
5. Attractive and inspiring In-store displays (27.8%)
The least critical influencing factors were celebrity endorsements on social media campaigns (2.8%). Here, Estates specifically need to consider their marketing tactics, submitting wines for awards, vs selecting considering celebrity endorsements.
What now in Wine: Key considerations
The market is growing – retailers and Estates need to consider their tactics in winning Wine
Promotional activities on Wine for sale in bulk may entice sales and ensure unit movement.
Retailers and Suppliers need to consider strategic partnerships to find the best solution in bringing customer-centric produce to the consumers
Consider which Wine Awards you would like to compete in as an additional influencing factor in sales.
5.Customer Decision Tree
Retailers should consider the customer Decision tree when doing store and shelf layouts based on customer preference in wines – knowing that these will differ based on the trade channel and critical customer.
In ensuring a product that speaks to consumers' priorities (needs) in what they are looking for, further supported by what they've mentioned, will influence them (wants), we have a vast array of metrics we can tap into to capitalise on the promising future of Wine.
*Our full Wine report will be released on 7 July 2022, where we are noting new trends, consumer behaviour, label designs, preferred estates and critical considerations and recommendations on winning in Wine in South Africa, in the heart of the customer
Daymon Research: Wine Consumption in South Africa (Sample: n = 1500, LSM 5 – 10, May 2022, Quantitative Online Survey)
- South Africa's Wine Industry Information & Systems: 2021 statistics
- Euromonitor: Wine in South Africa (2022)
- Mintel: Wine and Sparkling Wines in South Africa (2022)
- Mintel: A year of innovation in ready to drink wine and spirits (2022)
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Roelien Havenga – Director Business Intelligence (Africa & Latin America) – email@example.com