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Klipdrift hopes to benefit from rand depreciation

| Wine and liquor

The depreciation of the rand by 25 percent against the dollar last year might be what Klipdrift Brandy needed to stay ahead of the international competitors that have flooded the South African market recently.

Klipdrift Premium, which has been named as World’s Best Brandy for 2016 at the World Brandy Awards, is operating in an industry where brandy consumption has decreased by 25.61 percent in the past five years to end 2014, while whisky has been on an upward curve in the same period.

“Definitely the whisky has surpassed the brandy over the past seven years or so,” Genius Mnywabe, Klipdrift’s marketing manager, said. “Unfortunately, the figures are not readily available at this stage. But we want to turn this around by boosting our image and by introducing new campaigns in the future.”

The study on liquor consumption patterns conducted by researcher Elias Holtzkampf in South Africa shows that brandy consumption fell by 25.61 percent from 2009 to 2014, while whisky consumption rose 16.67 percent in the same period. The volumes for brandy dropped from 46.6 million litres per year in 2009 to 37.1 million litres in 2014, while whisky consumption climbed from 30.6 million litres to 35.7 million.

The manager said winning the award came at the right time for Klipdrift. “It is a great honour for Klipdrift and it came at the right time. We are all excited about this achievement and it makes us want to do even better in the future.“

Mnywabe also said the weak economy was a challenge for the business as a whole because consumers tended to downgrade to cheaper products, such as beer, in order to cope with rising prices.

“I expect the beer industry to do better in the future as the economy slows down even further. But I am optimistic that Klipdrift will have a market share as some of our South African products will benefit from a weaker rand.

“The imported products will be expensive considering the depreciation of the rand. This can only benefit local goods like our own Klipdrift as we might pick up consumers who preferred to drink international brands,” Mnywabe said.

Klipdrift is reasonably cheap compared with other premium brands as the retail price for a 750ml bottle will set you back about R170.

Klipdrift is owned by Distell and the company reported year-on-year revenue growth of 11.2 percent to R12.2 billion in its interim results to the end of December. The brandy and other spirits category, which includes Klipdrift, contributed 8.2 percent revenue to Distell’s coffers in the six-month period to the end of last year.

SA Brandy Foundation director Christelle Reade-Jahn was quoted as saying: “Brandy has lost nearly 40 percent of its market share as sales volumes dropped to 33 million litres a year and whisky has climbed to more than 40 percent.”

The foundation has argued that brandy’s falling market share had hurt wine farmers and communities in Western Cape and Northern Cape and it has asked for tax breaks of up to R200 million a year.

The National Treasury was not available to comment on the proposal.


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