This document provides an overview of wine promotions in South Africa. It discusses: 1) The size of the South African beverage market in 2012, with alcohol accounting for 26.7% of the market. 2) Trends in the beverage market including continued promotional activities and influence of health and wellness. 3) Various promotion options available to the wine industry, including print media, in-store promotions, tasting events, and sponsorship. 4) Growth in the number of liquor store outlets from major retailers from 2005 to 2012. 5) Analysis of wine print promotional tracking, media tracking, and shelf performance factors to evaluate promotional effectiveness.

1. The Promotional
Effectiveness
of Wine in SA
30 August 2012
Presented by Gareth Pearson
BMi Research

2. Setting the Ambiance
We are all mortal until the first kiss and the second glass of wine : Eduardo
Galeano, Uruguayan author (1940-)
Wine is bottled poetry : Robert Louis Stevenson, Scottish author and poet
(1850-1894)
Where there is no wine there is no love : Euripides, Greek playwright (480-406
BC)
Wine improves with age - the older I get, the better I like it : Anonymous
If a life of wine, women and song becomes too much, give up the singing :
Anonymous
2

3. More Ambiance
If a life of wine, women and song becomes too much, give up the
singing : Anonymous
Wine is wont to show the mind of man : Theogenis, Greek poet (6th
century)
Drink wine, and you will sleep well. Sleep, and you will not sin. Avoid
sin, and you will be saved. Ergo, drink wine and be saved : Medieval
German saying
Whether wine is a nourishment, medicine or poison is a matter of
dosage : Paracelsus (Phillip von Hohenheim), Swiss alchemist, physician
and astrologer (1493-1541)
Life is too short to drink bad wine : Anonymous
3

4. The Size of the Glass
4

5. The Size of the Pint
Total SA Beverage Market 2012 (E)
31 689 Million Litres
Alcohol
26.7%
Rest of Market
73.3%
Note: Reconstituted volumes
Includes powdered beverages
Includes tap water estimate – 1.4 litres p.p.p.d
5

6. Total Beverage Trends
Total Beverage Trends for SA market
 Still feeling effects of slowdown in economy
 Consumers are spending but more aware of options and alternatives
 Promotional activities still continuing
 Continued influence of health and wellness
 Consumers seeking value/promotions
 Increased launches of functional beverages – prominent internationally
6

7. Wine Promotional Effectiveness
Promotions
Shopper Print
Promotional
Marketing Tracking
Shelf Health Media Tracking
In store

8. Wine Promotions
Promotion choices available to the Wine Industry
 Broadsheet
 Media - TV, Radio and Print
 In store – POS
 On consumption – POC
 Wine tasting
 Direct marketing
 Online
 Sponsorship

9. Retail Liquor Development
Rate of store expansion in the liquor market by majors
Outlets June 2005 June 2012
TOPS
156 600
Pick n Pay
16 140
93
Shoprite Checkers
7 90 new
stores
Game p.a.
- 4
Total 179 834
9

10. Promotional Effectiveness
Wine Point of Sale, Print Collateral & Graphic Design
 “Winery print collateral and point of sales material is meant to be noticed, handled, read and re-
read. More importantly, it's meant to cause the consumer to go out and buy a few bottles of
wine. Sometimes a good accolade isn't enough. Effective wine point-of-sales and print collateral
takes a brand message and incorporates a strong take-away that the consumer can relate to and
use in the future.”
 Source: www.intwinemarketing.com

11. In Store Promotion
In store promotion

12. Instore Performance
In store performance factors

13. Major Liquor Sponsorship
Sponsor Sport Property Term
Carling Black Label Soccer Carling Black Label Cup 2011 - 2013
Carling Black Label Rugby Varsity Cup Supplier 2009 - 2012
Castle Cricket Test events : Test Team : ODI Team 2012 - 2015
Castle Rugby Springbok Supplier ; SuperRugby Supplier : Castle 2011 - 2016
Championship
Castle Soccer Bafana Bafana : PSL Supplier 2012 - 2017
Smirnoff Lifestyle Smirnoff CT Comedy Festival
Smirnoff Music The Smirnoff Experience
Amstel Music Amstel Golden Hour - Music 2010 -
Amstel Programme ClassAct – SABC1 AFP 2011 -
Bells Golf Bells Experience Golf Day
Bells Fly Fishing Bells Experience Fly Fishing
Captain Morgan Adventure Kingsley Holgate Malaria Expedition On going
Captain Morgan Angling Billfish Classic - Angling 2010 -
Heineken Lifestyle Taste of Johannesburg and Cape Town 2010 -
Heineken Music SAMA Awards Partner 2011 - 2013
J&B Horse Racing J & B Met 2010 - 2015
Johnnie Walker Motor Sport Contribution to McLaren F1 On going
Windhoek Arts KKNK
Windhoek Canoeing Berg river Canoe Marathon 2010 - 2012
Windhoek Rugby Sharks Supplier 2011 - 2013
13

14. Print Promotional Tracking
Wine print promotional tracking and analysis
 Who are the top retailers promoting wines?
 Which brands are being promoted ?
 Which geographic regions are promotion dominant?

15. Total Print Advertising
Jan to June 2011 - 2012
Total broadsheet tracking and analysis
R 200
Total Market
Millions
R 180 Top 10
Spend
Millions
R 180
R 160
R 160
2011 – R993m R 140 2011 2012
R 120
R 140
2012 – R1 109m R 100
R 120 R 80
+11.7% R 60
R 100
R 40
R 80 R 20
2011 R0
R 60
R 40
2012
R 20
R0

16. Print Advertising
Expenditure
58% increase in spend for period
70
Liquor
60 Market
50
Rm Volume
40 Value
Growth
30
20 Value ± 25%
Volume ± 3%
10
0
Jan - Jun 09 Jan - Jun 10 Jan - Jun 11 Jan - Jun 12

17. Print Advertising Spend
Selected Categories
Jan - June 2011 Jan – June 2012
Product Category Print Spend Product Category Print Spend %
Beer - Malt R 7 764 263 Beer - Malt R 9 304 179 20%
Brandy R 4 540 535 Brandy R 5 799 927 28%
Cane R 378 094 Cane R 345 627 -9%
Flavoured Alcohol Beverages R 4 583 531 Flavoured Alcohol Beverages R 6 701 592 46%
Liqueur R 1 690 031 Liqueur R 1 572 406 -7%
Rum R 1 224 597 Rum R 2 232 177 82%
Sambuca R 58 764 Sambuca R 109 250 86%
Shooters - Sour R 98 939 Shooters - Sour R 120 349 22%
Vodka R 1 625 249 Vodka R 2 241 762 38%
Whisky R 12 798 776 Whisky R 15 484 766 21%
Wine R 16 034 083 Wine R 16 624 221 4%
Total Total 19%
R 50 796 867 R 60 536 260

18. Category Print
Advertising Expenditure
Share
Wine accounts for 27% of total spend for period (Jan to Jun 2012)
18
16
14
12
10
Rm
8
6
4
2
0

19. Top 10 Company Brands
(% number of Ads)
Top 10 Company Brands % no of ads MAT June 2011 vs MAT June 2012
6.00%
5.00%
4.00%
3.00%
MAT LY
2.00% MAT TY
1.00%
0.00%

20. Top 10 Brands
(% number of Ads)
Top 10 Brands % number of ads MAT June 2011 vs MAT June 2012
1.40%
1.20%
1.00%
0.80%
0.60%
0.40%
MAT LY
0.20% MAT TY
0.00%

21. Top 10 Retailers
(number of Ads)
Top 10 retailers promoting wine in print MAT June 2011 vs MAT June 2012
40.00%
35.00%
30.00%
25.00%
20.00%
15.00%
MAT LY
10.00% MAT TY
5.00%
0.00%

22. Wine Promotions
Regional Share
(Number of ads Jan – June 2011 vs 2012)
Wine Print Ads Regional share by number of ads
40000
35000
30000
25000
20000
2011
15000
2012
10000
5000
0

23. Wine Media Tracking
So how has wine been promoted through media this year?
 Which of the print, TV and radio mediums is being target ?
 What brands are being promoted ?
 What are the strategies being employed in media spend?

24. Wine Media Tracking
Wine Adspend TV, Radio and Print Jan to June 2011 vs 2012
R 16 000 000
R 14 000 000
R 12 000 000
R 10 000 000
R 8 000 000 2011
2012
R 6 000 000
R 4 000 000
R 2 000 000
R0
Print TV Radio

25. Top 20 Brands All Media
(Print, TV and Radio)
Top 20 Brands Adspend for Wine all media January to June 2011 vs 2012
R 10 000 000
R 9 000 000
R 8 000 000
R 7 000 000
R 6 000 000
R 5 000 000
R 4 000 000
R 3 000 000 2011
R 2 000 000 2012
R 1 000 000
R0

26. Wine Media Tracking
Print
Print Adspend for Wine January to June 2011 vs 2012
R 1 200 000
R 1 000 000
R 800 000
R 600 000
R 400 000
2011
2012
R 200 000
R0

27. Wine Media Tracking - TV
TV Adspend for Wine January to June 2011 vs 2012
R 7 000 000
R 6 000 000
R 5 000 000
R 4 000 000
2011
R 3 000 000 2012
R 2 000 000
R 1 000 000
R0
Nederburg Drostdy Hof Namaqua Douglas Graca Two Oceans Obikwa Casillero Del Swartlands
Green Diablo

28. Wine Media Tracking
Radio
Radio Adspend for Wine January to June 2011 vs 2012
R 2 500 000
R 2 000 000
R 1 500 000
R 1 000 000
2011
2012
R 500 000
R0

29. Wine Media Tracking
Wine media trends YTD
 TV remains the dominant media channel for wine by spend for this period
 Spend in TV and Radio have grown marginally while Print has declined for this period
 Nederburg’s TV spend dominant as a result of Master Chef SA
 Nederberg combine TV and Print in this campaign
 Douglas Green made significant increase from 2011 to 2012 with strong TV spend and
increased spend in radio
 Drostdy Hof and Namaqua also dominant in TV and radio spend for the period reviewed

30. In Store
Shoppers making purchase decisions at shelf
 “Shopper marketers got it wrong when they claimed 70% of
purchase decisions were made in store. It’s actually 76%,
says new US research by Point of Purchase Advertising
International (POPAI).”
 Jason Frichol MD Integer June 2012

31. Cutting through the clutter
Purchase appeal
 Visual appeal - Labels, bottles, images
 Brand experience – tried it before
 What makes a new brand irresistible to shoppers?
 What type of wine drinking experience does a bottle on shelf promise?
 Does it evoke a sense of excitement, connoisseurship, celebration, dining ?

32. Would you buy?
 BLACK BOX MERLOT
 CAFE CULTURE COFFEE PINOTAGE
 CLOOF - DAISY DARLING SAUVIGNON BLANC
 CLOOF - HAPPY DRAGON PINOTAGE
 CLOOF - POSH PINOTAGE
 CLOOF - THE VERY SEXY SHIRAZ  ODD BINS BIN



NAUGHTY GIRL
FAT BASTARD SHIRAZ
HAPPY DRAGON PINOTAGE SHIRAZ
Or 


NO NAME DRY WHITE
UNNAMED SAUVIGNON BLANC
WINE LOVERS COLLECTION
 INKSPOT PINOTAGE
 LEOPARDS LEAP MAGNUM
 MAD HATTERS WINE
 MAIDENS PRAYER RED WINE
 MEERKAT SUN ANGEL
 PORCUPINE RIDGE SYRAH
 THE CHOCOLATE BLOCK 2009
 WOLFTRAP WHITE
 THE CRICKET PITCH
 TOFFEE CHUNK
 LADY IN RED

33. Attracting Sales

34. Catchy Themes

35. Shelf Health
Shelf Health performance factors By Store
 OSA vs OOS – the prize is won or lost in the final 50 meters to shelf
 On shelf forward share
 Retail Selling Price vs Promotion Price
 On Promotion vs competitors
 Planogram compliance
 Merchandising – KPIs and measureable metrics
 Ranging – more critical, more scientific, more geocentric
 Effective communication from marketing boardroom to shelf (E2E)

36. Shelf Forward Share
What is the your brand’s shelf share by store?
35.00%
30.00%
25.00%
20.00%
2011Q1
15.00%
2011Q2
10.00% 2011Q3
5.00%
0.00%
Brand A Brand B Brand C Brand D Brand E
2011Q1 20.65% 6.35% 26.22% 14.95% 31.83%
2011Q2 18.22% 6.28% 27.55% 15.20% 32.75%
2011Q3 21.14% 6.58% 26.61% 13.77% 31.90%

37. What is my share of type of
display in the store?
Promotional activity competitor check – by store
50.00%
45.00%
40.00%
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
Brand 1 Brand 2 Brand 3 Brand 4 Brand 5
Dump Bin 6.38% 44.68% 4.26% 12.77% 31.91%
Free Standing unit 28.70% 18.52% 14.81% 16.67% 21.30%
Full Gondola End 26.47% 25.74% 11.03% 23.53% 13.24%
Shared Gondola End 38.75% 8.75% 1.25% 5.00% 46.25%

38. On-shelf availability
 Capturing the lost
sales
 Driving short, medium
and long term
solutions

39. Retail Execution
– On Shelf Availability
 Ensuring the products a customer wants to buy
are actually available when they want to buy
them
 European Out Of Stock rates are typically
8.3%
 OOS costs the industry €4bn in Lost Sales
EVERY YEAR
 20% of all OOS remain for more than 3
days
 Inventory counts are typically 65%
inaccurate
 Chance of finding all 40 items on your
shopping list? 4%

40. The size of the prize
When faced with an OOS shoppers will:
 31% will switch stores
 26% will buy another brand
 19% of the time buy brand variant
 15% will buy at a later time
 9% will buy nothing
If a manufacturer can improve OSA by 3%,
it’s worth 1% increase in sales
If a retailer can improve OSA by 2%,
it’s worth 1% increase in sales
Source: ECR Europe

41. Shopper Marketing
Understanding Trip Missions for effective sales
 Trip targeting
 Adding incremental items
 Requires a much more scientific approach
 Uncapping own internal data
 Skilling up internally

42. Shopper Marketing
Shopper Marketing Shifts
BEFORE NOW
CPG marketers operated under CPG organizations are
two separate silos: integrating these two disciplines
1) Shopper Insights to form Shopper Marketing
Focused on the consumer‘s
needs, attitudes, usage, etc.
2) Category Management
Focused on product
definition and role,
performance mgmt, go-to-
market/sales strategies, etc.

43. Shopper Marketing
Derived Value of Market Leader Characteristics
Market Leader Value to Retailer and
Characteristics Manufacturer
Understanding the Shopper Develop Shopper Occasion Centric
Occasion as the Foundation for Merchandising and Marketing
Insights Strategies
Joint Planning Assures Alignment
with Retailer & Manufacturer Elevate Relationships for Better
Objectives Collaboration and Success
Execution Informed by the Trip
Mission and the Store Improve Store Level Effectiveness
Fostering an Environment
of Continuous Learning Ongoing Cycle of Improvement and
and Innovation Increased Relevance to Shopper

44. Trip Mission
Profiling the Trip mission
 Profiling the trips reveals:
 Which trips are most important?
 Which do we want to grow?
 Where do we want to win?
 Metrics include:
 Share: % of trips, units, sales
 Trip Details: units and Rands
 Discount/deal characteristics
 Basket contents (e.g. top categories)
 Time of Day/ Day of week
 Geographic distribution

45. International Trends
What is happening globally?
 SA is a net follower of international trends
 What are beverage trends doing globally?

46. Beverage Consumption –
Emerging Markets
Developed vs Emerging
Source : Canadean

47. Drivers of Change
But a number of themes have been key in shaping the beverage industry
over recent years
Source : Canadean

48. Retailer Expansion –
Private Label
B Brand currently under pressure globally from PL
Source : Canadean

49. Global Growth Forecast
95% of the forecast contribution to growth comes from emerging markets
Source : Canadean

50. Global Growth Forecast
What the beverage future could look like
Source : Canadean

51. Growth Forecast
African dream or future?
Source : Canadean

52. Thank
You
www.bmi.co.za
52