Cape Town - While the trend in the retail sector is for retailers and distributors to consolidate to obtain economies of scale, there remains producer fragmentation in the SA wine industry, according to Mike Ratcliffe of Warwick Wine Estate near Stellenbosch.
"South Africa is not recognised as a hub for wine consolidation. I think the SA wine industry is trending more to (further) fragmentation," he said at the recent Nedbank VinPro information day for the local wine industry.
"It means there are more wineries and more brands in SA, vying for fewer spots on retail shelves and in restaurants."
In his view, the SA wine industry is also not able to supply the large quantities demanded internationally. That is why he feels the local industry needs to become more focused.
"Many SA wine producers cannot supply enough for some of the most lucrative opportunities existing in the world. That is why, going forward, fragmentation just won't work. We have to get behind our best brands and ensure they get to scale," emphasised Ratcliffe.
"We need a focus in the SA wine industry - a national and regional focus on what our wine represents. The focus could be on a unifying soil type or even a climate."
In his view, the SA wine industry has reached a stage where there are some brands which have reached world-class. Yet, when the SA wine industry is defined by volume, it is insignificant.
"We simply cannot compete with bigger national wine industries. We cannot compete on scale, so we must compete on other advantages. For instance, we have great wine makers and brands popping up," he explained.
"We need focussed bigger brands at every price point."
In his view, success in the SA wine industry has largely been driven by "the small guys - the mavericks".
"It does not help if we have iconic wines made in small quantities and still sold cheaply. It does not help to have ones which are too expensive either," said Ratcliffe.
"We need fewer brands and a focus on bigger brands at every price point. We should also commit as an industry not to fragment even further."
Lastly, he said it is important to provide proper training for people working in the vineyards.
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