The wine industry continues to fare well amid the tough economic environment the producers find themselves in, and it continues to recover from the pandemic and other social factors.
Industry leaders were replying to the Bureau for Food and Agricultural Policy (BFAP) baseline ten-year outlook for the country’s agriculture.
Wines of South Africa chief executive Siobhan Thompson said tides are turning to the positive side following years of the industry not doing well.
It is getting better
“While 2022 saw domestic consumption recover to levels like 2017, the market remains constrained from a value perspective since consumers are under pressure to manage their spending.
“Looking ahead, domestic wine sales are expected to remain largely dominated by low and entry-level-priced wines, with some movement towards higher value categories,” she said.
Thompson said many challenges hampered wine sales over the past year, including the high inflation globally, the energy crisis, and the conflict in Ukraine.
“Stock levels which increased sharply in 2020 and 2021 due to a lack of trade during the Covid-19 alcohol bans and disruptions, have since reduced substantially to an acceptable level in 2022,” she added.
According to Thompson, the lack of government support and inefficient port operations are some of the factors that are holding South Africa back while trying to compete in an uncertain global market.
“Our focus for the past few years and going forward is to drive premiumisation of South African wine and to ensure that our wine becomes recognised globally as premium quality, exciting and distinctive,” she said.
‘We have data to work on’
Meanwhile, Rico Basson, chief executive of the newly formed industry body South Africa Wine, said things are slowly looking up for the industry.
“Although this forecast still predicts a challenging time ahead for wine and brandy producers, this does also present an opportunity, with a call on all producers to take note and plan accordingly.
“The South African wine and brandy industry now needs to use this forecast as an opportunity to unlock greater value for the industry with the right product,” he said.
Basson said it is time to identify long-term business partners, attract investment, and prioritise improved bottle and bulk wine prices.
Time to chase long-term goals
Dr Kandas Cloete from the Bureau for Food and Agricultural Policy (BFAP) said it was important for the industry to look at long-term goals to ensure continuous job creation and a boost to the economy.
“The sustainability of the industry has broad-based socio-economic benefits. The wine industry contributes considerably to the Western Cape economy and remains one of the cornerstones of the horticultural trade.
“On the social side, it also has some of the biggest multipliers in the agricultural sector with about 10 jobs off-farm for every one job on-farm. Consequently, incentivising the producers of the 90 000 hectares of wine grapes to remain operational would sustainably support over 270 000 jobs and over a million dependents,” she said.
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