MBA (UCT), PhD Candidate, CEO/FOUNDER of DataLedger, a South African blockchain technology company.
They still don’t get it. But then again, it’s the usual suspects… The global wine market and in particular the consumer have changed. Thinking about making money in wine like it was done the past 300 years, quite frankly, is fatal. Thinking about it differently is THE opportunity! Wine price points are not likely to increase much in a market where there is an oversupply. That means more innovative ways of increasing margin is required along the entire value chain. The USP lies there and must be shaped accordingly. Marketing and positioning the entire wine value chain as THE competitive force as opposed to focusing only on individual brands, is the more plausible way forward. Selling wine based on colour, smell and taste is no longer a strategic advantage as most brands sold globally adhere to high quality standards already. Selling underlying values of what the brand stands for and being able to demonstrate and verify it via the value chain, is better. Like trust. Like commitment to the environment etc. Besides, subjectivity to the hoity toity palate is what got us into trouble in the first place. Young and future drinkers don’t care about it. The issue of margin is an industry structural and cultural challenge and requires a radical collective mind shift. New business models to remove duplication of costs like for example with compliance and the replacement of intermediaries such as agents with automated B2B and B2C business processes where the wine consumer is part of the grape to glass winemaking journey, is what the global wine industry should enable. Unlearning how to sell wine to be successful in a fast changing digital post-COVID market environment where Gen Z and Millennials demand to know where what they consume originates from, must become the absolute priority. Convert the primary wine value chain into a credentialed market place where the producer makes most of the money. In other words, integrate production directly with sales and distribution to increase margin for a better more sustainable NET FARM INCOME - NFI (currently at less than 1% in the South African wine industry; a South African wine producer currently makes less than 1% annual net returns on their investments). At the current rate that grape farmers are pulling their vines out, in 3 to 5 years the total hectares under vines in South Africa could well be less than 60 000. This is not a consolidation strategy. This is mayhem and will lead to large scale retrenchments and unemployment. Adapt or die…
