Klippies and Coke gets an extra kick
REVERSAL: SA LEAVES PRICIER WHISKY FOR HUMBLER BRANDY
At double the price, thirsty consumers turn their back on imported tipple.
Klippies and Coke. Ricky Louw. Karate Water. These are the orders ringing out in bars across South Africa as thrifty consumers switch from imported, big-brand whisky to various types of locally produced brandy to quench their thirst.
The trend, fuelled by a stagnant economy that is strangling spending, has led to the first increase in brandy sales for more than a decade, and falling sales of pricier whisky.
This is an unexpected reversal in a country that multinationals Pernod Ricard and Diageo targeted as a lucrative growth market for their whisky brands, and where they had enjoyed years of surging sales among an emerging middle class. Pernod Ricard sells more Jameson in South Africa than anywhere else apart from the United States.
Brandy still lags its rival in the contest to be the number one spirit by some distance – about 32 million litres is sunk a year versus nearly 39 million of whisky – but the gap has almost halved since 2014, when the economic slump set in.
Most brandies retail for around 110 rand for a 750 ml bottle, compared with around R175 for Diageo’s Johnnie Walker Red Label and R270 for Pernod Ricard’s Jameson, the two most popular whiskies.
“At my local a double brandy is the same price as a single Jameson,” says Fred Bester, 36, a sales consultant in Johannesburg. “That’s why I now drink brandy.”
The international companies, however, are fighting back. They are shifting focus to more affordable whisky brands and dipping into their war chests to step up marketing drives.
Pernod Ricard does not break down results by country, but acknowledged brandy was taking market share in South Africa because of lower pricing.
The company’s sales director Werner Vosloo said it was trying to avoid a “knee-jerk” reaction that could damage the long-term po- tential and image of its brands and was steering clear of price cuts. He said it was also increasing advertising and promotional spending. He declined to provide figures, but the drive is evident on billboards, TVs and social media across the country. Hollywood actor Don Cheadle can be seen sipping Chivas Regal on a huge billboard overlooking one of the country’s busiest routes on the way to the Johannesburg business hub of Sandton – known as the richest square mile in Africa. Pernod Ricard also had a marketing push for its more affordable premium brand, Ballantine’s, which costs about R200. It is trying to woo customers with “gift packs”, said Vosloo, typically a free whisky glass when you buy a bottle.
At my local a double brandy is the same price as a single Jameson
Britain’s Diageo, the number one player, has seen a 6% drop in whisky sales over the past year. But it said this year that it was benefiting from the launch in the country of Johnnie Walker Green Label – a more affordable gift option to its high-end Blue Label. A bottle costs R630 versus R2 150.
The two companies dominate the market for whisky, which accounts for a third of the SA spirits market. They are, however, somewhat insulated from falling sales by a solid demand for vodka, which they also sell. It is the nation’s number three spirit.
At the turn of the century, brandy was the number one spirit with about 40 million litres consumed a year.
Over the following years, however, robust economic growth gave rise to a burgeoning middle class with more disposable income. Sales of imported whisky rocketed while brandy demand shrunk. – Reuters