On-trade only...

One of the great characters in South African wine is a man named Charles Back. He runs the Fairview winery in the Paarl region of the Western Cape....

One of the great characters in South African wine is a man named Charles Back. He runs the Fairview winery in the Paarl region of the Western Cape. Not only does he produce great wine and tell a great story about Nelson Mandela, but he makes a lot of money from goats. Yes, that's right, goats.

Realising that wine sales alone would not progress his business the way he wanted he decided to go into the production of goats' cheeses, many of which are seriously considered to be delicacies by those in the know. He also plays heavily on the goats in the branding of his wines, calling one of them Goats Do Roam and another The Goatfather.

The UK market

Charles has fascinating insights into the state of the South African export market to the UK. Completely dominated as it is by the off-trade, when asked which South African wines he thinks are the most popular in the UK, he replies: "Whichever is the cheapest on promotion - those are the rules of engagement.

"We've taken ourselves out of supermarkets in the UK in the last few years and have suffered a dip in volumes as a result. But our price in the bottle has subsequently gone up. This is where I want to be in the market."

There are many others like Charles, fed up with the way UK retailers are stripping the margin out of their products. So they're happy to sell through specialist wholesalers or wine shops - safe in the knowledge they will get the right reward for each sale.

There was hardly a single winemaker whom I spoke to on my recent visit to the country who wasn't upset at the level of discount they had to provide for the UK supermarkets. And the fact the wines are being offered at such low prices by the likes of Tesco and Sainsbury's is having an interesting effect on the UK on-trade, and particularly pubs.

The on-trade exclusive

There can be little doubt when it comes to wine that customers are getting increasing annoyed at the huge price differential between the on and off-trades. There are even apocryphal tales of customers scribbling out the price of a £13.99 Australian shiraz on a pub wine list and replacing it with the words '£3.99 in Tesco'.

Perhaps it is as a result of this that more companies are coming up with on-trade exclusive brands. WaverleyTBS has been working on this strategy for some time and with South Africa in mind it launched Cape Promise in 2003.

The wine is produced in the Daschbosch winery near the town of Rawsonville. Peter Cronje from the winery believes this strategy will continue for some time.

"It has become pretty clear that you cannot mix your on and off-trade brands," he says. "It helps us stay away from the complexity of the issue. The problem is when something becomes a commodity - like chardonnay did a few years ago. If that happens then you get a real problem with price points."

Cape Promise is a joint wine making project with two co-operatives but the brand is solely owned by WaverleyTBS. The sauvignon blanc has become the flagship of the range - and according to Peter demand is almost outweighing supply with that variety - such is its popularity.

And the partnership has come up with a new wine which will again be launched exclusively into the on-trade in the UK. Isabelo is a Fairtrade wine and will be launched this month.

Waverley will continue to use brands like Cape Promise in pubs as a means of helping open customers' minds to the potential of South African wine - food-matching with the brand and its range of grape varieties is one thing on the agenda.

"The thing is, 90 per cent people that go into a pub are not connoisseurs - but you do still want to educate them," says Peter. "So the food matching issue is definitely something we will look at - especially in view of the smoking ban."