Smaller Wine Output, But Better Prices

Due to a lack of water and competition from other commodity crops, the area planted to wine grapes has seen a steady decrease over the past few years. It is expected that production will continue to decline over the next five years, but this is not necessarily bad news for the industry, as South African wine moves into higher price brackets on the export market.

- Wessel Lemmer And Adri Esterhuyse

Global harvests over the past three seasons have had a huge impact on the local wine industry. In 2017, the smallest international harvest in 50 years was recorded, which led to an increase in global wine prices. This was followed by the smallest harvest in 10 years in South Africa, when local production dropped 13% due to severe drought. The after-effects of the drought resulted in another small harvest in 2019, which was only 2% lower than the harvest of 2018 at 1,22 million tons, but 17% lower than the five-year average before 2018.

The smaller 2018 harvest, together with better international prices, resulted in a 24% increase in the bulk wine price from R5,54/l in 2017 to R6,86/l in 2018. However, due to increased local prices, total wine consumption in 2018 in South Africa declined 4,1%, from 450 million litres in 2017 to 431 million litres.

INTERNATIONAL

In a relatively saturated market, inconsistent weather patterns continue to influence international stock and price movement.

Production fluctuations have been more regular and intense over the past seven years than in the previous seven. Average world production over the past 10 years was 270 million hectolitres, with international wine consumption fluctuating between 240 million hectolitres and 244 million hectolitres (see graphs 1 and 2). The wine not used for consumption was utilised for industrial purposes, such as in the distillation of spirits. In 2016, 13% (almost 34 million hectolitres) of world production was used for industrial purposes.