Last month, August 2020, the wine industry (along with its patrons) collectively rejoiced as the ban on alcohol was officially lifted. Wine farms were once again able to start producing, and retail stores were finally able to unlock their doors, albeit in a restricted capacity. While this has all been excellent news for the industry, wine farms are under no illusion as to the task that lies ahead. For many producers, much of the foreseeable future will be spent trying to recover from the devastating effects of the Coronavirus pandemic.
In the paragraphs that follow, we will examine the extent of the , as well as the efforts to aid its recovery. Time to grab your favourite glass of red and read on.
Stats to make you bleary-eyed
In our previous article on the state of the wine industry, we highlighted a few statistics that laid bare the desperate plight of producers. The latest statistics paint a grim picture. According to certain reports, the South African wine industry has lost more than R5 billion in revenue year to date. If the current trajectory continues, this number could increase to R7.5 billion. Industry job losses now surpass 20 000, with more expected to follow. As if this isn’t enough to make you want to drown your sorrows, some experts are now predicting that South Africa could lose stand to lose up to 90% of its wine producers within the next five years. With the recent easing of lockdown restrictions, wine producers finally have a chance to reverse some of these trends and get the industry back on track. However, the road ahead is sure to be a tough one.
The global wine industry has also suffered, although not nearly as much as the local market. While restaurants and pubs were closed down to enforce social distancing, alcohol was not banned. This allowed producers to use other avenues to get their wines out to customers. South Africa, by contrast, endured a hard shutdown on all alcohol sales and exports. This has left the South African market with a steeper hill to climb than many of its global competitors.
A virtual vineyard of ideas
As wine producers battle to survive, many have looked at new ways to market and sell their products. One of the ideas that have gained a lot of traction is the virtual wine tours concept. Several wine farms have seen the potential in digitally marketing their offering and used it to great effect. Producers have found that virtual tours offer plenty of benefits. Not only does it present a cost-effective method of marketing wines, but it also places the product in front of a global audience. Lanzerac Wines, for example, has put together several online events, such as virtual wine tasting, virtual wine and chocolate pairing events and tutorials on how to get the most out of a virtual wine tasting experience. Many of South Africa’s top wine farms have now taken to offering similar virtual events. Even as lockdown restrictions ease and people start venturing out to their favourite wine farms, expect this trend to continue.
Are retail stores helping?
The rules of level 2 lockdown permit retail outlets to once again sell wine to the general public. This has no doubt provided some welcome relief to producers as they attempt to revive struggling wine farms. However, before you raise a glass in celebration, it must be pointed out that the process of selling wines through retail shops is not without its challenges.
One of the biggest challenges facing wine producers when it comes to retailers is pricing. Many large retail chains impose a price ceiling on the wines stocked on their shelves. This means that producers are forced to cut their already thin profit margins or face the prospect of not being able to sell the products through these retail stores. At a time when wine farms need all the assistance they can get, this is a particularly tough decision to make.
On the exports front, things aren’t too rosy either. Several wine farms have indicated a drop in exports due to losing shelf space with retailers overseas. Due to the lockdown restrictions, wine farms have struggled to get their products out to their overseas clients. And with the uncertainty surrounding the lifting of restrictions, many international retailers have been unwilling to keep shelf space open for South African exports. This is a big blow to local farms who have worked hard to market their wines overseas.
Getting help from the Marketplace
Given the current survival stakes, it is no wonder that an ever-increasing number of wine farms are turning to virtual marketplaces to help them grow their business. Virtual marketplaces like UBU International offer wine producers the ideal platform to build their customer base and increase sales. The UBU ecosystem allows wine farms to reach thousands of new customers that they wouldn’t ordinarily have access to, and market directly to them. By marketing directly to customers via any one fo the many wallet apps, producers do not have to rely as heavily on retailers to market their wines. UBU has made it incredibly simple for customers to buy goods through one of these apps, and even rewards them for doing so. Through our order-and-collect function, for example, businesses have complete control over every step of the customer experience. The pay-and-deliver feature allows producers to organise personalised deliveries to their patrons, eliminating the need for third-party delivery services. All payments are facilitated via the UBU platform, in any of the wallet apps, so companies do not incur the additional cost of setting up their payment facilities. It’s the perfect opportunity for wine farms to increase revenue, retain more of their profits and build great relationships with a growing customer base!
The wine industry’s long road to recovery will not be an easy one. Amidst a restricted environment, pricing pressure from retailers, a growing need to market digitally and a customer base with evolving expectations, producers will have much to contend with in the coming months. We are committed to making the road ahead a little easier. The features on offer provide producers with an opportunity to market their wines and other products to a ready-made, incentivized and growing customer base. This allows businesses to save on costs without needing to sacrifice customer sales.
All of these features play a role in helping businesses in the UBU ecosystem grow substantially. If you’re looking for an excellent platform to market your wine farm, look no further than UBU! Let us know if you would like to get your own branded loyalty program and mobile wallet app for your wine farm.