Research commissioned by Wines of SA and carried out by Whitehouse & Associates reveals a new generation of affluent, mobile Africans who are open to quality wine brands.

This is encouraging news for SA's established wine exporters, since it opens potentially lucrative markets.

The study shows that Angola, Cameroon, Côte d'Ivoire, Ghana and Nigeria all have a generally favourable opinion of South African wines.

The two largest and fastest growing markets are Angola and Nigeria, where SA holds market share of 3,4% and 11,5% respectively. Duncan Bonnett, of Whitehouse & Associates, sums up the outcome of the research in a single sentence: "If your wines are selling in London, get into Lagos."

He says South African wines are generally highly rated on the continent in terms of price, quality and packaging, and are perceived as better suited to the cuisine and lifestyle of Africans than French offerings.

Brand loyalty is high, which may provide opportunities for local producers to capitalise on the desire of many African people to support brands with an African provenance.

Bonnett says the African wine market grew 86% by value between 2001 and 2005 and is continuing to expand, thanks to greater disposable income in many sub-Saharan economies fuelled by a buoyant commodities sector and rapidly growing infrastructure. Over the same period, international tourism spend in the region increased 25%.

The fact that wine consumption is outpacing growth in international tourism indicates that locals are taking to wine with gusto, and the research shows it is mainly younger, well-educated and travelling Africans with high levels of disposable income who are responsible.

However, since most African countries see tourism as a key strategy to increase foreign-exchange revenues, wine exporters should not neglect the business and leisure tourist markets, Bonnett says.

With the market growth has come increased competition, and Bonnett says South African wine producers must keep an eye on Chilean producers offering competitive trading terms. He recommends they collaborate closer with importers and distributors on issues such as the registration of international brands, accelerating response times and committing to stronger marketing and promotional support.

Currently, SA's penetration of the sub-Saharan markets does not match the overall growth levels in the rest of the region, he says.

"South African exporters tend to target English-speaking countries and follow well-worn paths of other South African companies into the continent."

While wine exports from SA to the sub-Saharan region have risen 111% over the past five years to $18,84m, their overall share of the market has only increased to 9,8% from 8,6%.

SA is already a leading supplier to Tanzania, Kenya, Uganda, Mozambique, Angola and Cameroon.

The study identified Côte d'Ivoire, Ghana and Nigeria as having most potential for South African wineries. Consumption in these countries is escalating, particularly at the upper end of the price spectrum, where locals are not averse to spending considerable sums on sparkling wines and other imports.

Angola is expected to be a key market in future due to the growth of its oil industry. It imported wine worth $65m in 2005, the most recent year for which figures are available.

Bonnett urges local wine exporters to steer clear of the lower end of the African market, which is more vulnerable to changes in economic conditions and where the French, Spanish and Chileans are already active.

The research identified potential in the rapid growth in upper-end hotels and retailing outlets across the regions, with smaller producers especially sought after.

Other findings of the research include that sparkling wines are becoming hugely popular in African nightclubs, and that South African wines are very competitive in terms of price and quality in the mid to upper price bands.

The main drivers of growth in Africa are rising employment and higher government revenues, which go with a general expansion of the middle class. In addition, the belated information and communication technology boom has led to a new, younger group of relatively wealthy consumers across the continent.


Interestingly, the study also shows that the consumption of wine in these regions revolves around social occasions such as weddings, birthdays and funerals, rather than day-to-day consumption in bars or at home. A movement away from beer and spirits towards wine has been noted at the top end of the market due to health and religious perceptions. Many west Africans perceive wine to be a more socially acceptable drink than spirits or beer.

The study also shows that many South African merchants are not sending enough promotional materials, such as samples, corkscrews, posters and T-shirts, to African countries, which is putting them at a disadvantage.

The authors of the study recommend that local producers attend more foreign wine fairs, align themselves with large hotel chains and restaurants, and offer more flexible credit and agency agreements.

Source :- allafrica