The alcohol industry in South Africa remains as competitive and dynamic as ever as the list of beverage options available to consumers continues to grow with experts projecting market growth of 18.61% between 2023 and 2025.
“In 2022, brands made a concerted effort to increase ‘above the line’ (ATL) spending to pre-Covid-19 levels in an attempt to make up for revenues lost during the lockdowns and subsequent alcohol bans. These efforts are expected to continue over the next few years,” says Melanie Campbell, Marketing Director at Edward Snell & Co.
Business climate places stress on industry players
Campbell says the industry has had to negotiate a challenging business environment in South Africa in recent years, a scenario that this is likely to continue into 2023. “Persistent rolling electricity blackouts and water security concerns have added to the triple challenge of unemployment, poverty and inequality in the country.”
The increase in fuel prices is an example. Last year, South Africans were paying 20% more for a litre of petrol and 39% more for diesel in December, compared to January. The higher fuel prices had the knock-on effect of disrupting supply chains and threatening businesses’ profitability and sustainability.
“The recent reports that the price of petrol and diesel will decrease by R2.06 and R2.80 per litre respectively is good news for the business, but it is just one of many factors we have to consider,” notes Campbell.
Despite security improvements to the business, Edward Snell experienced an escalation in armed robbery attempts on its transporting trucks. “We have taken the necessary actions to address this issue, protect the wellbeing of our employees and ensure that our targets continue to be met,” says Campbell.
Illicit alcohol market a dampener for industry
She says the illicit alcohol market represents one of the most serious threats to both the industry and consumers. Fostered during government’s ban on alcohol during the pandemic, illicit sales now make up as much as one-fifth of the overall alcohol market since the pandemic.
“Tragedies such as the 21 youths who lost their lives last year at the Enyobeni tavern in the Eastern Cape remain a low light for the industry. They force us to reflect on how the flouting of compliance regulations and laws can have calamitous effects and how, going forward, all stakeholders in our sector must collectively commit to operating ethically and in good faith,” continues Campbell.
New product categories emerge
On a more positive note, consumers’ changing preferences have seen the industry evolve and develop new product categories such as ready-to-drink (RTD) items that include hard seltzers, canned cocktails and non-alcoholic spritzers.
“Since 2019, gin has steadily entrenched itself among the most popular spirit categories, breaking the vice grip that spirits like vodka and brandy had long held. Our Stretton’s Gin, in particular, has seen notable equity gains, along with our whiskey offering, Grant’s, while previously niche spirits such as cognac, tequila and Jägermeister continued to enjoy growing popularity. This is a trend that is expected to continue in 2023,” explains Campbell.
Celebrity endorsements on the rise
The explosion in celebrity-owned and endorsed alcohol brands are further disruptors to the industry. Cassper Nyovest’s Billiato, Tendai “Beast” Mtawarira’s The Beast Wine Collection and Bonang Matheba’s House of BNG are three recent examples.
Edward Snell pursues greatness for good
Edward Snell & Co’s ethos is “pursuing greatness for good”, a pursuit the company is uncompromisingly committed to. Corporate social responsibility initiatives such as the Glenfiddich Challengers Club Auction and Firstwatch Entrepreneurs Challenge are at the heart of the good that the company plans to effect.
Speaking to the essence of the Glenfiddich campaign, which raised half a million rand, Campbell explains that all proceeds will go towards rehabilitating natural springs in the Eastern Cape Drakensberg region to provide easier water access to the surrounding communities.
“By improving water purity at the source, we hope to contribute to a South Africa where the furthest anyone has to walk for clean water will be just a few steps.”
2023 agenda and outlook
Edward Snell & Co. earned various commercial and product-related successes in 2022, which Campbell and her team plan to build on in the new year.
“Firstwatch Whisky and Stretton’s Gin both won Gold at the International Sprits Business World Whisky Masters and Spirits Business Gin Masters respectively, while Russian Bear won Silver at the Spirits Business Global Vodka Masters. Receiving recognition in these highly competitive product categories serves as validation and motivation for our teams,” says Campbell.
In 2023, Campbell intends to focus greater attention on relationships and collaborations to achieve joint success. “Preparations for this are well underway, and this is perhaps best epitomised by our brand-building and distribution partnership with Lyre’s Spirit Co, the world’s most awarded, leading non-alcoholic spirits.” “By continuing to display a resilient mindset, problem solve at pace, drive ownership and accountability, communicate effectively both internally and externally and lead change in our business and the broader industry we will be able to continue to provide South Africans with impeccable, award-winning spirits, no matter their drink of choice,” concludes Campbell.