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Regional wine identity: the value of a united voice


22 July 2021  -  Jonathan Steyn & Raphaela van Embden

Shakespeare once asked if a rose by any other name would smell as sweet. The answer when it comes to our wine regions, rather than Romeo, is probably not. Why? Because the power of a region and its associated message, purpose and values, resonates in the minds of consumers.

A trusted region signals quality and reassurance, convincing consumers to pick this wine over one from a different region, no matter if they otherwise share the same varietal or price point.

The strength of your message

Regions with a strong identity produce wines with a distinct taste memory that are typical of their terroir. In other words, they create wines that are recognisable and cannot have been made anywhere else. A Chablis could never be confused with a Montrachet, for example.

But identity is more than taste or typicity. It’s about message. When you hear names like Hollywood, Champagne or Silicon Valley, those names don’t just tell you what products those places produce. It tells you who they are, the type of people that work there, the values they imbue into their businesses and the history that defines how they do things. After all, wine is more than just a consumable good. It’s a cultural product, representing the place it comes from.

But a region’s message isn’t just hatched fully formed when a region is created, but carefully crafted by its members. In order for a region to have a strong message, an agreement needs to be made by its members as to what that message is. The more that single message is believed and retold, the stronger the identity. However, when members start telling contradictory messages, it causes confusion, weakening the overall identity.

Yet, achieving a single voice is not easy, as the individual interests of a region’s members need to be integrated into the larger identity story. This is a pressing issue in the Stellenbosch district and wine route. “The wine landscape seems to be increasingly populated by terroirists who are trying to reinvent the wheel,” says Johann Krige of Kanonkop Wine Estate. “One of my core philosophies is to just do what you do consistently well. Sometimes what works, works for a reason. These types of producers are trying to vie for attention and look for a quick fix, often at the expense of strong regional brands.”

 

The value of reputation

For a region’s identity to translate into actual economic value, people outside of the region need to believe in its message. This can be measured by a region’s reputation, determined by its members’ past quality track record. When one producer in the Stellenbosch Wine Route, for instance, receives a high wine rating or acquires a positive reputational image over time, it creates a halo effect that filters down to the entire wine region.

Research has shown that a region’s reputation translates into price premiums. “Preserving the authenticity of a WO region is absolutely essential to the premiumisation of the particular appellation,” says David van Velden of Overgaauw Wine Estate, referring to the action or process of attempting to make a brand or product appeal to consumers by emphasising its superior quality and exclusivity. “The economic value of the region’s reputation gets particularly diminished when the consumer gets confused and even more so when the consumer gets fed false information,” says van Velden, emphasising the incentive for the Stellenbosch Wine Route — and their members — to ensure the region’s identity is upheld in order to maintain high price premiums.

In 2008 Harper accused South Africa of lagging behind other New World wine countries such as Australia, New Zealand, the USA, Chile and Argentina had all made an effort to promote their region’s identities. However, in 2020 Wine Enthusiast nominated Stellenbosch as a global wine region of the year. Regional identity in South Africa has clearly come a far way, but many feel there is still work to be done. “I think for way too long the Stellenbosch region has been misused by many external parties to the detriment of Stellenbosch and we here in Stellenbosch are partially to blame,” says Jean Engelbrecht of Rust en Vrede. “If we are not willing to protect the integrity, values and perception of what Stellenbosch is, then who will?”

Nora Sperling-Thiel of Delheim expressed a similar sentiment, pointing out an advertisement from German supermarket Aldi for Stellenbosch Rosé: “Dry cuvée from Stellenbosch, one of the most renowned and significant wine regions of South Africa.” Yet, despite this powerful identity message, the wine was set at a mere EUR 3,99. “As long as we as Stellenbosch grape and wine producers of origin do not protect our origin with a minimum value for our grapes or on shelf, we will not shift value to the consumers,” says Sperling-Thiel.

 

Beware the piggybackers

Economists have shown that consumers will buy a bottle of wine based on their trust in a region’s identity alone. Not only that, but they’d even be willing to pay a far higher price because of the region. A recent study showed that merely having Stellenbosch on a wine label resulted in an additional premium of R58.37 on a wine’s final price.

Wineries outside of the region might therefore be tempted to piggyback on these reputational and economic benefits by simulating membership and appropriating a region’s name as their own. This creates multiple problems for a region’s identity. For one, it expands the identity’s membership beyond the boundaries of a region. Identities are strong when you can instantly picture its members based on their proximity.

Certainly, this has been the case for Stellenbosch, where multiple challenges to the region’s identity are experienced on a daily basis, as Engelbrecht explains: “One can see how producers are trying to re-draw the boundaries – not mentioning the ones that are historically wrong. Many producers purchase grapes in Stellenbosch and cart it off to other regions which ultimately will alter any product from that region. Purchasing grapes in different areas is an internationally accepted practice, but in a South African context it should be stated more clearly.”

The biggest problem, however, is that it dilutes the region’s message. When non-members start creating their own stories, norms and values, it challenges the region’s existing identity, bringing their authenticity and legitimacy into question. What was once a clear story is now confusing. Consumers won’t know who to believe or what message to listen to. Their trust and attraction to the region will be lost. With Stellenbosch in mind, chair of their regional collective, Mike Ratcliffe further argues that: “With the renewed energy of the Stellenbosch Wine Route on lobbying and advocacy, the important collective action involved in defending brand Stellenbosch has been gaining prominence, but it needs to be a truly collaborative effort involving everyone to have impact."

Ultimately, regional identity needs to be skilfully woven into South African wine’s core strategy. All wine regions in South Africa, including Stellenbosch, must unite as a collaborative force to craft a unified message that builds trust and increases premiums. 

Steyn is a convenor and researcher at the University of Cape Town Graduate School of Business. Van Embden is the 2019 Veritas Young Wine Writer of the Year winner and researcher at UCT. They are both partners at strategy agency Collectivantage.