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SA wine hangover lifts

| Wine and liquor

The wine market has finally shaken off its prolonged hangover, and indications are that hopefully sales in the next few years will be something to cheer about.

Stellenbosch-based liquor giant Distell reported recently that its wine portfolio was the star performer in its past financial year with volumes increasing by 14% and revenue rising by an encouraging 16%. CEO Richard Rushton said the rate of volume growth achieved by Distell’s wines was significantly ahead of the industry – which indicated market share gained. Distell owns well-known wine brands like Nederburg, Neethlingshof, Plaisir de Merle, Allesverloren Durbanville Hills, Fleur du Cap, Graca, Chateau Libertas and Tassenberg.

Rushton said said the relatively recent addition to Distell’s wine brand portfolio, 4th Street, had been the standout performer although perlé wines had also shown strong growth. He said the 15% revenue gain in Distell’s ‘wine power brands’ was driven by 4th Street’s 159% growth in sales value - mostly in the local market. Distell also saw good gains overall in Africa - especially in Kenya.

What’s more, Rushton disclosed that Distell’s wine export volume growth had been seven times that of global growth in wine consumption in 2015. He said Distell’s premium wines had also performed favourably - particularly Nederburg, and Durbanville Hills, which both achieved double-digit volume growth for the year.

“The reputation of these brands continues to improve, as a result of increased focus and the critical acclaim appearing in widely read international wine publications and excellent scores achieved in leading wine competitions.”

Distell’s resurgent wine sales follow a trend that was evident in the last set of financial results from smaller Paarl-based rival KWV. At that time chairman Marcel Golding reported good growth in wines that were sold under the KWV, Laborie and Roodeberg trademarks in South Africa. Revenue growth of 21% was achieved in the local market.

KWV’s wine brands have benefited from a slew of awards. KWV was the only South African wine brand recognised on the Drinks International List of the World’s most admired wine brands (where the company ranked 33rd.) Golding believes KWV had proved – through its success in numerous wine competitions – that its wine was as good (if not better) than the fashionable boutique offerings.

“Our success is the result of our access to exceptional grapes, our relationship with our growers, the investment we have made in our winemaking team and our ability to constantly innovate and improve our cellar practices.”

He stressed KWV continued to invest in procuring better quality grapes than what the price point of the wine required.

“This extra expense is seen as part of our marketing investment and we will continue with this approach as we grow our volume in the premium wine segments.”

Further proof of a more spirited wine segment was that the strong bidding at the 41st Nederburg Auction once again achieved premium prices. Nederburg Auction Manager Dalene Steyn said the second highest average price per litre was achieved.

“Bidding was especially dynamic, with the most diverse buying audience yet. More private buyers than ever before resulted in a competitive bidding experience.”

Total sales ended on R6.2m, just shy of last year’s record of just over R7m. An average price per litre of R576 was achieved - compared to R597 in 2014. Record prices were set in four out of six categories - Fortified, Cap Classique, Port and Dry White.

Gaming and hotel group Tsogo Sun was again the top buyer with a spend of R642,800. Supermarket chain Spar - which owns the Tops liquor outlets - spent R758,600, which was up a hefty 65% on their 2014 spend.

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