The wine industry in South Africa is facing several challenges, including port logistics, legislative uncertainty, inaction against the illicit alcohol trade, rolling blackouts, and geopolitical disturbances. The head of sales for agricultural at Nedbank Commercial Banking, Daneel Rossouw, gives a detailed overview of the wine business in the country.
According to Rossouw, farmers are facing significant losses, rising from 28% in 2018 to nearly 40% in 2022, while the percentage of profitable farmers plummeted from 20% to 12% over the same period.
Speaking on exports, Rossouw said the disastrous state of the country’s ports and rail system requires urgent attention so that wine exports can return to pre-pandemic levels.
Good and bad in wine exports
“If you look at the last two years, we’ve seen a lot of pressure on our export volumes. If you look at the latest industry feedback, it indicates that volumes actually have been down about 15% in the last 12 months, with both bulk and export volumes,” he shares.
However, there’s reason for cautious optimism. The industry is not sitting idly by. Efforts are underway to improve farm-level efficiencies, and there’s a growing focus on premiumisation to strengthen the South African wine brand in export markets, he shares.
“If you look at the growth in the premium, that’s a £10 plus per bottle category in the UK. That’s still our biggest export market that happened in 2022, growing by 54%, when compared with Australia, it’s still a big export market. We grew by 24% in the Australian wines,” Rossouw says.
In this episode, he also discusses:
- The need to grow wine tourism;
- Increase in local consumption; and
- Improving export competitiveness.
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