Brandy Report (8/12): South African Brandy

Hamish Smith gets under the skin of South Africa’s little-known gems.


LIKE MOST WINEMAKING COUNTRIES, SOUTH AFRICA PRODUCES BRANDY. Unlike most winemaking countries, South Africa is good at it. Yet this prowess is largely unknown outside of the country’s borders, where 92% of production is consumed. A traditionally strong domestic market has satisfied producers until now but recently demand has eroded. As the traditional African consumer moves towards international brands – once the domain of middle-class white South Africans – producers will need to float the message of their brandy beyond their borders.

“South Africans, generally speaking, deem imported goods better or more aspirational than [those] locally produced,” says Edward Snell’s manager, Schalk Van Wyk. “Our historical background has led to a development of a previously unknown black middle class which has a hunger to express success with premium/material goods, as most developing economies have seen.”

KWV is a major player in the market. Peadar Hegarty, head of strategy and marketing director spirits and RTD, says South African brandy must “face up to the competitive challenge from whisky and vodka” and address “the image of brandy” which is “still seen as the poor relation of the spirits market”.

Education is key in South Africa – something the likes of Diageo, through its jointly-backed Brandhouse distribution company, has managed with its whiskies. Johnnie Walker Red grew 60% between 2010 and 2013, while Smirnoff has also taken off. South Africa is now one of the top 10 scotch markets and the wider whisky category is now about a third of all spirits sales. Meanwhile brandy now represents about a quarter of sales, just ahead of white spirits. It is in danger of being left behind in what is its only significant market. 

“The local whisky marketers have done a fantastic job of educating South Africans on the intrinsic differences between whisky offerings – and, by default, creating a hunger to learn more,” says Van Wyk. 

A trend towards connoisseurship and food and spirits matching, albeit embryonic, is the shard of light in what is otherwise a dingy picture. 

“Not all brandy products have been in decline,” says Caroline Snyman, director of luxury brands at Distell – the number one player in the market. “Some notable exceptions have come from the speciality, connoisseur segment of the market as more South Africans get to hear of the world-class performance of our products at international shows.  

“This country has won the title of Worldwide Best Brandy no fewer than 12 times over the past 14 years. We are confident that the market holds good prospects for the continued growth of the premium brandy category.”

As home to almost all of the category’s consumers, the domestic market is less about choice than necessity. But efforts need to be made so there is choice in the future. Spreading sales around the world would mitigate the risk of the current one-market strategy and is the best route to building value in the long term. 

“I believe the future of South African brandy lies not in South Africa but in export markets and thus would require a rebranding of the brandy offering as whole,” says Van Wyk. “Similar to champagne and cognac, pot still brandy needs to insist on an appellation claim – which many local commentators feel should be Cape Brandy or Cape Pot Still Brandy. The pot still variant of the local brandy category needs to be romanticised too – similar to single malt. Needless to say, it’s not an overnight endeavour,” says Van Wyk.

KWV’s Hegarty sees hard work ahead. “The reality is that we as South African brandy producers have done a lousy job of telling a great story. If you refer to South African brandy internationally then, if anything, there is a negative impression.”

South African brandy has higher costs than many other brandies – minimum maturation is three years, for one. But it can still undercut cognac, the entry level of which starts at £20/$25. Hegarty thinks value for money is the category’s marketable asset abroad. “[We need to] tell the value story – what other category can offer the equivalent of a 10-year-old pure pot still product for US$16?”

Bartenders are surely the best route to credibility. If South African brandy is as good as the producers say and the awards suggest, the only challenge is to get it into the hands of opinion leaders. 

The South African Brandy Foundation has made inroads at home but more should be done in the bar capitals of the world. In the World’s 50 Best Brands Report survey South African brandy didn’t get a sniff of the top 10 best sellers of its category. Speaking to the bartenders confirms this. Danil Nevsky of Amsterdam’s Tales & Spirits tells DI: “Unfortunately we can’t find any to taste.”

While there are those in developed markets seeking to unearth the next new spirit, right now South Africa is in a different phase of its drinking development. It’s not fatalistic to say that mainstream consumers might need to reject their distilling heritage before they can rediscover it.  

A collective export push makes sense. It will take investment and time, but with the rand at a low rate of exchange, there is no better moment to float the message of quality, inexpensive brandy overseas.

The Brandy Report comes in 12 parts. Folllow the links here Category introduction by Hamish Smith (1/12), Brandy in the Philipinnes by Hamish Smith (2/12)Cognac by Nicholas Faith (3/12)Premium brandies by Richard Woodard (4/12)Armagnac by Ian Buxton (5/12)French brandy by Hamish Smith (6/12)Spanish brandies by Dominic Roskrow (7/8)