Monday, July 7, 2008

Lower Alcohol wine gets global support

Lower alcohol wines have received support from a wide array of global wine stakeholders. American winemakers, British retailers and even British lawmakers have shown support for lower alcohol wines.

The trend of New world wines to be bolder and riper flavored are maybe coming to an end. Some winemakers in California are attempting to reduce the alcohol levels of their wines.

Adam Tolmach, one of California’s most celebrated winemakers said that US wine makers went too far in producing high alcohol level wines. He stated that "We lost our rudder when we went for ever bolder, riper flavours. We have to do the right thing."

Tolmach said that, at 15 % or higher, the alcohol content of his wines was too high. California is the fourth biggest wine-making area in the world, after France, Spain and Italy. As in South Africa and Australia, Californian wines tend to be stronger because they are produced in a hotter climate.

Californian winemakers have responded by picking grapes earlier and employing other tactics designed to produce the more "balanced", lower alcohol wines that are popular in Europe.

This move has in part been prompted by demand from US restaurants, which often hire European-trained wine buyers (sommeliers) who want lighter wines. The producers of lower alcohol wines also received a boost from the British government. The UK delegates are putting pressure on the European Commission to relax their stick wine making rules and regulations. This will make it easier for producers to sell wines with very low alcohol content, even as low as 6.5 %.

Jeremy Beadles, the CEO of the British Wine and Spirit Trade association welcomed this move by the British government. He added that retailers are interested in expanding the range of lower alcohol wines which they can offer the consumer. In a recent article, the Telegraph (UK) indicates that British retailers are starting to show signs of a backlash against high alcohol wines. Last year, Sue Daniels, Marks and Spencer's wine technologist, said the company would be trying to find more 12% wines in future.

Adam Tolmach also states that trying to limit alcohol content while retaining flavour is an increasingly major challenge for wine producers as the effects of climate change become more marked.

In South Africa some producers has been embracing the making of lower alcohol content wines for quite some time. Danelle van Rensburg, winemaker of Van Loveren indicated that the making of light wines have its challenges. She indicated that it is more challenging to achieve the right balance between the sugars, acids and the fruit of lower alcohol white wines.

Because of the lower alcohol levels, the other components of the wine are more prominent and thus grape cultivars with natural lower acid levels , like Semillon are usually used for light wines.

Adi Badenhorst, a wine consultant from Stellenbosch, indicates that higher alcohol wines are the more popular choice in South African wine competitions. The average alcohol level of the recent John Platter’s 5 star wines are in the region of 15,3 %. This higher alcohol in wine has even affected French wines. The average Bordeaux's alcohol content has grown slightly, up from 12.5% to 13%, the Telegraph reported.

Badenhorst added that some wine producers feel that the physiological ripeness of our (SA) grapes are incline to have higher sugar levels and thus are prone to higher alcohol content wines.

Badenhorst further stated that higher alcohol wines are favored by wine judges because the “alcohol carries the wine out of the glass” better. He concluded that the lower alcohol wines tend to have an inherent elegancy and balance with better potential to mature.

Tuesday, July 1, 2008

Taking a local brand to the global arena

This is the view of Mr. Justin Letschert the CEO of Union-Swiss. Letschert was the speaker that the University of Stellenbosch Business School (USB) business breakfast gathering held on 27 June.

The first thing businesses must realize is that expansion to global markets can not be exclusively done by just starting a new export division. The experts, who established and managed the business and brands on the local market, must be involved in the executing of the strategies for entering global markets.

South African brands may have brand equity on the local market, but on the global stage is just another product. This implies that entering a new market is launching this new product form scratch.

Government regulation and duties, capital expenditure (cost) and the lack of established networks are some of the main difficulties in entering new global markets.

Letschert indicated that a simple calculation can determine the most viable international markets. By adding a country’s GDP/ Capita ranking and the population rankings the possible best export markets can be identified. This figure gives a more accurate indication of potential markets. The top 10 countries on this list are USA, Japan, Germany, UK, France, Italy, Canada, Spain, South Korea, Russia.

The cost of the media in the specific country as well as the duties and regulations must be taken in consideration when evaluation potential new international markets. Language and counterfeit problems must also be taken into consideration when evaluating proposed new markets.

Letschert emphasized the importance of effective distributors in foreign countries. These distributors must be able to communicate and deliver what they are hired for.

Letschert further added that to succeed in the global business area you must out-think the opposition. The geographical and other practical drawbacks imply that you cannot out-do the opposition, you must out-think them.

You must conduct your business in a more professional manner than the first world standards. The reason for this is because the foreign market participants have preconceived negative ideas about (South) African businesses. You must give them no reason to believe or confirm their preconceived ideas.

Letschert concluded by quoting Mr. Koos Bekker form Naspers. Bekker once said that it is difficult for first world countries to do business in China. South Africa is not from the first world which gives us a business advantage.

South African tenacity is your biggest advantage when we compete and enter new global markets.