James Wilmore

Focus - The South African Wine Industry

By | 19 September 2012

The South African wine maket is still evolving at a rapid rate

The South African wine maket is still evolving at a rapid rate

Next week the wine producers of South Africa get to tout their wares at the bi-ennial showcase that is Cape Wine. The three-day Cape Town trade show, back after a four-year break following 2010's football World Cup, is expecting visitors from as far afield as China, Japan and Latin America. Here, just-drinks takes a look at the current state of the country's wine industry.

Performance/market

The number of wine producers in South Africa has fallen by 20% since 2005, to 3,527 in 2011, according to latest figures. This is mostly due to consolidation in the industry, as the amount of wine being produced in the same six-year period has actually risen by 32% to 831.2m litres. 

Domestic sales of natural wine in 2011 rose slightly by 2% on the previous year to ZAR310.8m (US$38m), while export sales in the same category fell by 5.5% to ZAR350.4m. The UK and Germany are the joint-largest export markets, each accounting for 23% of exports. Sweden comes in third with 10%.

In one notable trend, the amount of red wine being produced as a percentage of total hectares has risen to 44%. In 1990, reds represented just 16% of production. As such, white wines have fallen from 84% of production in 1990, to 56% last year. According to a Wines of South Africa (WoSA) spokesperson, this shift is due to producers reacting to demand from export markets and aiming for a more diverse range.

The country's wine market has also witnessed a "massive shift" from packaged to bulk shipping as the major brands move to in-country bottling.

Regions

Distribution of vineyards (% of total hectares)

  • Stellenbosch - 16.73
  • Paarl - 16.28
  • Robertson - 14.25
  • Malmesbury - 13.96
  • Breedekloof - 12.56
  • Olifants River - 9.98

Regulation 

The South African drinks industry as a whole is fighting potentially new draconian rules, which could bring a total ban on alcohol advertising in the country. Plans to raise the legal drinking age from 18 to 21 are also being considered.

Meanwhile, at Cape Wine next week the first wines to carry a new industry-approved ethical stamp will be unveiled. Sustainability will be a key feature at the event, with the majority of exhibitors being offered "recyclable stands".

Personnel

In July, the Company of Wine People unveiled Eduan Steynberg as its new MD after Hermann Böhmer left over a "difference of opinion". 

The future/opportunities 

Evolution in the South African wine market is still happening at a "rapid rate", according to the WoSA spokesperson. "The industry is coming of age and there is still of lot of R&D being done around export markets," the spokesperson said. "The US is also showing strong growth, as is Asia and Africa."

Meanwhile, wine tourism is continuing to help boost the country's coffers.

just-drinks will be reporting live from Cape Wine at Cape Town International Convention Centre from 25-27 September.

Expert analysis

Wine in South Africa to 2014

This databook provides key data and information on the wine market in South Africa. This report is a comprehensive resource for market, category and segment level data including value, volume, distribution share and company & brand share. This report also provides expenditure and consumption data for the historic and forecast periods.

Sectors: Legislation, Wine

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