While wine lovers have long been blessed with low wine prices in South Africa, for Mzansi’s wine grape producers this has been a curse threatening the sustainability of their business. However, the tables are now turning.
After a three-year drought that has played havoc with wine grape harvests, wine stock levels are currently very low. This shortage of wine now presents the industry with an opportunity to raise the bar in terms of pricing, says Vinpro chairman Anton Smuts.
“We’ve already seen an increase of 35% to 50% in the prices of bulk wine over the past two years, and 10% in packaged wine. Let’s build on this momentum to ensure a sustainable environment for investment.”
Smuts added that wine producers cannot remain sustainable if they continue to sell their wine too cheaply. Some producers still sell wine for less than the price of bottled water.
Over the past decade wine grape producers have been under immense financial strain as the consequences of low wine prices filtered down from the cellars to the grape farms.
“Production costs have risen by 7.4% annually over the last ten years, and with wine prices remaining stagnant up until recently, more than 80% of South African wine producers are farming below a sustainable net farm income of R30 000 per hectare,” says Christo Conradie, wine cellar manager at Vinpro.
However, with recent wine price increases, net farm income more than doubled from a low base of R6 644 per hectare to R14 949 per hectare in 2018.
Meanwhile, a recent survey done by wine industry body SAWIS (SA Wine Industry Information & Systems) among producer cellars and Vinpro viticulturists, indicates that the 2019 wine grape harvest might at this stage be even smaller than in 2018 – a year in which the Western Cape was affected most severely by a three-year drought.
According to Francois Viljoen, consultation services manager at Vinpro, the grapes and bunches are smaller, lighter and less dense than usual. “This trend can be attributed to unfavourable weather conditions during flowering and set in October and November, as well as above average winds experienced at the start of summer,” Viljoen explains.