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The worth of intention in driving premium for wine regions

The worth of intention in driving premium for wine regions

When talking about premiumising a region’s wines, the answer might seem simple. If it’s a question of value, why not merely increase the price tag? After all, consumers understand that an expensive bottle communicates quality. However, when a bottle of Stellenbosch wine sells for discount prices on supermarket shelves, the onus doesn’t merely fall on the retail market to push prices, but the entire value chain.

To be clear, premiumising – elevating image and value – does not mean making all regional wines into fine wines selling at EUR30+, as many simply don’t play in the fine wine space. Instead, premiumising is about upselling. “If you’re on supermarket level you move it to premium, if you’re on premium you move it to ultra-premium,” explains Christo le Riche of Le Riche Wines. 

“To premiumise Stellenbosch is absolutely essential,” echoes Kevin Arnold of Waterford. “First and foremost, in terms of financial sustainability, but secondly, because it’s the most important [wine region in South Africa],” and is therefore central to the image of the country brand.

So how does one premiumise a region’s wines? The answer is intentionally. Premium is not produced through external market forces, but deliberately crafted through relationships at every step of the wine value chain.

Premiumising should start at the source: grape production and the relationship between growers and producers. “If you are seeing higher prices being achieved on the top end of the scale with your high-end wines, we need to see that stream down onto a viticultural level as well,” says le Riche, going on to explain how producers need to ensure that profit reaches growers and rural communities, and not opportunistically drawn out of the value chain. “We need to see the entire value chain go up with the same percentage as that which the wine is going up.” This will produce a cycle of quality, raising image and premiums, as the more growers earn, the more grape prices increase.

Improved grape prices will result in three major benefits. First, grape production becomes economically sustainable, promoting longevity for Stellenbosch as a region. “It’s important that the grower’s land is financially viable and sustainable,” says Arnold, highlighting how grape producers in Stellenbosch, Paarl, Franschhoek and Swartland from over the past decade have decreased in 956 to 792, with Stellenbosch losing almost 1500ha of vineyards in that time, according to SAWIS.  “We’re losing land, vineyards and farmers because we’re not doing enough.”

Second, Stellenbosch grapes will become unattractive to lower priced producers, increasing Stellenbosch’s image of quality and value in the absence of cheap grapes and wines. “You don’t want to regulate the price,” says le Riche. “What you can do is make it unaffordable to have a wine at that level on the shelf.”

The third benefit is that producers will be less likely to blend Stellenbosch grapes away into WO Western Cape, leaving more grapes to be absorbed by quality WO Stellenbosch producers. “Every single bottle of wine that has Stellenbosch wine in it that you’re selling as WO Western Cape, you are losing brand equity for Stellenbosch,” says le Riche. “We shouldn’t sell bulk to any other area,” adds Beyers Truter of Beyerskloof. “We should put everything into a Stellenbosch bottle and sell it that way.”

Improved grape prices will result in three major benefits. First, grape production becomes economically sustainable, promoting longevity for Stellenbosch as a region. “It’s important that the grower’s land is financially viable and sustainable,” says Arnold, highlighting how grape producers in Stellenbosch, Paarl, Franschhoek and Swartland from over the past decade have decreased in 956 to 792, with Stellenbosch losing almost 1500ha of vineyards in that time, according to SAWIS.  “We’re losing land, vineyards and farmers because we’re not doing enough.”

Second, Stellenbosch grapes will become unattractive to lower priced producers, increasing Stellenbosch’s image of quality and value in the absence of cheap grapes and wines. “You don’t want to regulate the price,” says le Riche. “What you can do is make it unaffordable to have a wine at that level on the shelf.”

The third benefit is that producers will be less likely to blend Stellenbosch grapes away into WO Western Cape, leaving more grapes to be absorbed by quality WO Stellenbosch producers. “Every single bottle of wine that has Stellenbosch wine in it that you’re selling as WO Western Cape, you are losing brand equity for Stellenbosch,” says le Riche. “We shouldn’t sell bulk to any other area,” adds Beyers Truter of Beyerskloof. “We should put everything into a Stellenbosch bottle and sell it that way.”

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