The local wine industry has seen a general shift towards higher-value products, driven by millennials looking for novel, high-quality food and drink experiences, while wine grape producers are looking for ways to boost their earnings.
The profitability of wine production has been under pressure for some time due to rising input costs, tough market conditions and, recently, unfavourable climatic conditions. This, in turn, has led to the area under wine grape production shrinking by 6% over the past five years and the number of wine grape producers declining by 34% to 2 874 over the past decade, according to the annual State of the South African Wine Industry 2018/2019.
Rico Basson, managing director of Vinpro, says the situation has sparked a renewed focus on higher-value products and higher price points per litre for both local and export markets, which should place the industry on a more sustainable growth path.
While local wine sales were down by 5% in 2018, primarily because of lower volumes being available due to the drought, the total value of sales increased by 1%. The value of wine selling for under R30 a bottle, accounting for about 53% of the market, increased by 3%, whereas that of super premium (R72 to R108 and accounting for 7% of the market) and ultra-premium wines (more than R108 and accounting for 4% of the market) increased by 2%.
The value of basic wines (selling for R30 to R48, 32% of the market) was unchanged, while that of premium wines (R48 to R72, 4% of the market) declined by 8%. Volumes were unaffected in the low price range, but declined 11% in the basic category, 14% in the premium category, 3% in the super-premium category and 4% in the ultra-premium category.
Wine styles
This story is from the 12 December 2019 - 15 January 2020 edition of Finweek English.
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This story is from the 12 December 2019 - 15 January 2020 edition of Finweek English.
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