The countrys bulk wine producers may have to look elsewhere for growth this year

The country's bulk wine producers may have to look elsewhere for growth this year

South Africa's bulk wine producers are likely to have to find new markets this year as competition in Europe intensifies, according to a new report.

The country's bulk wine market was boosted in 2013 by a weakening rand and new buyers being attracted by the quality, according to Rabobank's wine quarterly report, published today (14 April). Exports of South African bulk wine rose in 2013 by 37.6%, outpacing bottled wine growth.

But, the report warned: “The large recent harvest in Spain has led to declining bulk prices in that market, making them strong competitors once again.

“As a result, South Africa's exports of bulk wine to Europe in 2014 will be unlikely to reach the levels of 2013, leaving SA producers to seek new alternative markets.” 

Bulk sales now account for 65% of South Africa's wine exports.

Rabobank analyst Stephen Rannekleiv added: “Success going forward for bulk wine producers requires extreme production and logistics efficiency.” 

Bottled wine exports from South Africa also face challenges, the report says. “South Africa has built a solid reputation of offering good quality wines at attractive prices,” the report notes.

“However, with improvements in bulk wine shipping technology, wines that compete mainly on price have become a commodity. The challenge for companies that seek to export bottled wine at higher price points is to communicate a compelling story that resonates with consumers and differentiates the product from its competitors.” 

For the first two months of this year, exports of bottled and bulk South African wine were down compared to the same period last year, the report said, due to “tighter inventories in the market”.