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EVEN THE STRONGEST PRODUCT Iain Hooper, Managing Director of top-selling brandies by volume: Klipdrift,
category will decline if Edward Snell, one of the country’s Commando and Viceroy.
neglected by its key players leading marketers of SA and
and abandoned by those who were international liquor brands. It produces NOT A QUALITY PROBLEM
once its loyal customers. This is the fate brandy under the Oude Molen and But the brandy industry’s woes have
that has befallen brandy as a category Wellington brands. nothing to do with the quality of its
in South Africa, leaving brand owners products. “You will have to try hard
with the daunting task of trying to Reflecting the complex nature of the to find a bad South African brandy,”
restore its faded image. industry’s plight, the average price of notes Holdcroft.
a 750ml bottle of brandy in 2015 was
The rot set in well over a decade ago R126, compared with R169 for whisky. Uniquely, South Africa is the only
when brandy began losing its previously country where legislation requires
dominant share of the spirits market to ? brandy to be matured for at least three
whisky and, to a lesser extent, vodka. At Brandy’s woes are years. Even France’s much-vaunted
the heart of the problem lay failure by not about quality cognacs are required to be matured
brandy’s industry players to adequately for a minimum of only two years.
defend their brands and the product Yet brandy is the more expensive spirit
as a whole. to produce. “It takes five to seven litres Local brandies have also repeatedly
of high-quality wine to make one litre shown they can more than hold their
“Brandy producers sat back while of brandy,” explains Marlene Bester, own against the best in the world. “South
the whisky guys were working hard on Brandy Master for Distell’s Van Ryn’s African brandies have been judged best
marketing and the premiumisation brand. “The distilling and maturing in the world in 14 out of the past 16 years
of the category,” says Nick Holdcroft, process is the same as for whisky, at the International Spirits Challenge in
Brandy Ambassador for Stellenbosch- which is made from far cheaper grains.” London,” Reade-Jahn points out.
based liquor giant Distell. “By the time
brandy producers caught on they had STOPPING THE ROT At the heart of brandy’s problem is the
missed the boat.” The brandy industry set about halting aspiration-driven nature of consumers.
the rot in 2011 through a campaign “Younger drinkers come into the brandy
The industry has paid a big price led by the South African Brandy category because it can be bought
for its former complacence, reveals Foundation (SABF). The foundation’s cheaply,” says Reade-Jahn. “But they are
data from the South African Wine Director, Christelle Reade-Jahn, does lost to whisky as their incomes rise.”
Industry Information & Systems. The not downplay the huge challenge it
damage was especially severe in the represents. “It’s like turning a super Derek Ramsden put it aptly in his
seven years to 2014, during which tanker around,” she says. “Our first goal recent dissertation towards obtaining
brandy’s annual sales volume plunged was to stop the bleeding. We achieved his Cape Wine Master Diploma. “Brandy
by a massive 16-million litres (34%) to this in 2015.” is seen as a common drink,” wrote
30,6-million litres. Ramsden. “The old ‘1, 2, 3’ stigma of a
Last year marked the first positive 1-litre brandy, 2-litre Coke and a 3-litre
Whisky was the big winner, with its showing by brandy in a decade. Volume Ford is still attached to the category.”
annual sales volume in SA jumping grew 1% while whisky volume fell 7%.
10,2-million litres (33%) to reach PREMIUMISATION
40,8-million litres. In value terms, However, independent liquor market OF BRANDS
whisky handed brandy an even bigger analyst Elias Holtzkampf has his doubts There is no quick fix for the brandy
thrashing, more than doubling its value about brandy having finally turned the industry. “We are working our way up,
to R8,5-billion compared with brandy’s corner. He attributes the reversal in but it could take another 10 to 15
more feeble 15% rise to R4,7-billion. fortunes to the price of whisky jumping years,” laments Holdcroft.
in the wake of a slumping rand and the
In the process, brandy toppled from decision in February 2015 by Distell, It is widely agreed by industry players
number one position in the spirits the brandy industry’s biggest player, to that the way brandy will work its way up is
sector. Its market share fell from 38% hold the prices of South Africa’s three through the premiumisation of its flagship
to 25%, while whisky’s share jumped brands. “Whisky positioned itself with a
from 35% to 45%. few premium brands,” says Reade-Jahn.
“They drove the category and pulled all
“There has been massive margin the other brands with them.” >>
erosion in the brandy industry,” says
August–September 2016 strategicmarketing 25
