The current global Coronavirus pandemic has battered South Africa’s illustrious wine industry. This R40-billion-a-year industry has certainly borne the brunt of the lockdown. Sadly, for many, the damage may already be too much to recover from, while those who have survived are coming to terms with the fact that they won’t return to ‘business as usual’ for some time to come. The current status quo raises two interesting questions: what can the wine industry do to survive the short and long-term effects of COVID-19? And, what will the sector look like when we finally reach the other side?
Grab a glass (if you still have one) and let’s discuss.
The numbers don’t lie
Browsing through the current statistics makes for more sorrowful reading than a Shakespearean tragedy. South Africa is one of the only countries to have imposed a total lockdown on liquor sales. The wine industry has been profoundly impacted by this: with no wine being exported internationally or sold locally, several news outlets have attributed losses of up to R500 million per week, resulting in a head-spinning loss of R3 billion over six weeks. Even when restrictions were lessened briefly during Level 3, the consensus is that the industry will not be able to recover the lost revenue. Reports also indicate that the sector has experienced a decrease of between 30% and 50% in international imports.
Some more grim reading: recent reports reveal that, since the start of the lockdown period, around 80 wineries and 350 wine producers have closed their doors, resulting in roughly 18 000 people losing their jobs. This represents a loss of roughly 6% of the industry’s workforce. The wine tourism industry has also suffered greatly during this period. Wine tourism generates a little more than R7 billion annually and directly employs more than 10 000 people. While we are yet to see the full extent of the damage, there is a feeling that many tour operators won’t survive this pandemic due to the current lack of international visitors.
Restrictions may ease, but will it be enough?
With South Africa moving to Level 3 on 1st June 2020, alcohol sales were once again uncorked and wine producers were finally allowed to breathe again. Wineries across the country reopened their doors, allowing their wines to flow from their vineyards. But that all came to a sudden and abrupt end on 12th July 2020 when alcohol sales were banned once more. So, understandably, producers aren’t raising a glass just yet. Even when alcohol is reintroduced, there are still major hurdles to overcome on the long road to recovery. For example, wine farms are unlikely to offer wine tasting for the foreseeable future and wine tours are a long way off too. Once these tours do re-open, it may still be a while before producers begin to see the flow of visitors that they have become accustomed to.
As a result, producers will be even more reliant on retailers to move their brands. However, this dependence is not without its challenges. Retailers require wine producers to agree to specific price caps and if they don’t, the retailer may refuse to stock their items. This leaves producers at the mercy of retailers. The wine industry needs all the help it can get right now.
Take the tour from your living room
To compensate for not being able to offer wine tours, several wineries have started offering virtual experiences to customers. That allows producers to take viewers on a guided tour and showcase their wine farms. Virtual tours allow for an extended audience and, when correctly executed, can provide an entertaining and informative experience for potential customers. Once alcohol sales re-open, wineries can capitalize on these ‘tours’ by allowing viewers to purchase their favourite wines after their virtual vineyard visit.
Going direct – the way of the future?
The current crisis has forced wine producers to reconsider their business models and look at new ways of promoting and selling their goods. One such strategy is the direct-to-customer option. Several companies are foregoing selling through retailers and are instead marketing and selling directly to consumers. Empathy Wines is a great example of this. The US-based company has rejected the traditional method of using importers and distributors to sell their wines and instead sells directly to their customers, allowing them to offer luxury wines at affordable prices. We are sure to see many South African wineries follow suit once alcohol goes back on sale.
Know thy customer
Marketing and selling directly to consumers is a great opportunity for wine producers to get to know their customers. Knowing your customer and building a solid relationship has always been an integral part of any customer retention strategy.
In getting to know customers and their preferences, producers can more effectively tailor their offerings to suit consumers’ particular tastes.
As with other industries, wine producers who understand and speak to their customers’ specific needs are more likely to keep their customers coming back for more. What can be more satisfying than pairing your loyal customers with a perfect Pinot, or a satisfying Sauvignon Blanc?
Head off to the market
As wine producers continue to look at new ways of relying less on retailers while still acquiring new clients (and retaining existing clients), many are looking at alternative avenues to get their goods to market. One such solution is the UBU platform. A listing in the UBU Maketplace, allows wine producers to promote and sell their wines directly to a massive audience. UBU’s use of geolocation technology means new and existing customers can find a business where they are, browse, order and pay using the app and then either collect or arrange for the delivery of their goods from the convenience of their smartphones. A listing in the UBU Marketplace has the potential to expose businesses to thousands of would-be customers right in their vicinity. But there’s more!
Producers using the UBU Platform don’t have to rely as heavily on retailers to promote and sell their wines. They can sell directly to consumers in the Marketplace. In doing so, they also get to meet their customers and understand them better. The customer data and information gained allows producers to better understand their customers’ preferences and provide offerings, promotions and discounts that speak directly to them.
As a bonus, customers who frequent the UBU Marketplace earn cashback rewards when they spend, so there is always an incentive for customers to return to their favourite wineries.
A Perfect Pairing
It is no secret that the current pandemic has forced wine producers to think out of the box when it comes to selling their wares. Once alcohol sales reopen, the solution provided by UBU will not only allow businesses to survive the short-term but stands to make them more resilient in the long-term.
UBU provides businesses with exposure to an ever-growing audience, leading to an increase in customer acquisition. Just as a well-aged Cabernet Sauvignon is perfectly paired with a delicious steak, UBU offers wine producers the opportunity to seamlessly and effortlessly pair their customers with the perfect purchasing solution too.
Have a look at our UBU for Business page for more information on how your wine farm can weather the storm and adopt an innovative approach to pairing your customers with their perfect wines.