South African wine exports are normalizing after three difficult years.
- The South African wine industry hopes it will return to growth after three difficult years that impacted export volumes.
- But while there has been some recovery, the industry continues to normalize rather than grow.
- Various global factors have contributed to the better performance of South Africa’s wine exports this year, including a global shortage of white wine.
The South African wine industry is recovering after three difficult years which have seen it rocked by drought and the Covid-19 pandemic, the year’s exports to date suggest.
However, the sector continues to normalize rather than grow, according to Maryna Calow, communications manager for Wines of SA (Wosa), which markets SA wine exports.
âWe will likely recover our export numbers and end the year on a closer-to-average volume level of between 390 million and 400 million liters, depending on December exports. We are confident we can start over again. see the industry grow again, âCalow said. .
“However, it is important to keep in mind that the increase in export volumes that we have seen this year compared to last year is still only part of the industry standardization.”
In 2018, SA exported around 420 million liters of wine. In 2019, this volume fell to 320 million liters due to the impact of drought. The volume of exports remained at a similar level in 2020 (319 million liters), this time due to the impact of the coronavirus pandemic, notably on catering and the holiday trade.
But Calow thinks there is reason to be optimistic.
âWhat’s also encouraging is to see the growth in the value of our exports despite the fact that we started the year with a big surplus,â she said.
Shortage of white wine
According to Calow, several factors contributed to the improvement in export volumes and value during the year. First, South African wine exports to China have increased, as the trade war between it and Australia impacted exports from below.
In addition, major wine-producing countries in Europe – as well as wine regions in the United States and New Zealand – have been hit by adverse weather conditions that have resulted in declining crop yields.
âIf you have a big surplus, like we had at the start of the year, buyers usually come in and offer ‘next to nothing’.
âFortunately, due to global shortages, especially of white wine, many international buyers and importers turned to SA to fill the gap and SA producers were able to maintain their prices,â Calow said.
âWhat should therefore be the goal of South African producers in the future is to ensure the reliability of doing business with them and to ensure that our quality remains a key objective. This will hopefully lead to continued opportunities, âCalow said.
According to Ricco Basson, managing director of the organization of wine producers Vinpro, the export value of South African wine so far this year is around 10.2 billion rand (free on board, so not retail value, if any). In 2020, it was 9.3 billion rand.
SA wine is exported to more than 100 countries. The United Kingdom is SA’s largest wine export market, followed by Germany, the United States, the Netherlands and Canada. About 60% of South African wine is exported in bulk.
“It has been an extremely difficult year for shipping in general and we also have problems in our ports. This has resulted in delays of up to two weeks in getting our wine exports to its destinations,” said declared Basson.
“On this basis, I am happy that we can nonetheless increase our wine exports in terms of value and volume – not just year over year, but closer to pre-pandemic levels.”
Basson also noted growth in exports to the rest of Africa.
âWine is still SA’s second agricultural export commodity after citrus and still brings the country a lot of foreign currency. Now the challenge is to keep the momentum going. SA has always been in the lower levels in terms of international wine prices, so our main goal should be to increase the value per liter, âsays Basson.
South Africa is the eighth largest wine producer, accounting for around 4% of world production after Italy (18.3%), France (17%) and Spain (13.2%), according to the chief director of strategic partnerships and customer service. at the Ministry of Trade, Industry and Competition (the dtic), Tsepiso Makgothi. She says the South African wine industry is an important part of both agricultural and agribusiness value chains in South Africa.
âThe value chain comprising both viticulture and wine production contributes around 55 billion rand to the national GDP and provides jobs for around 270,000 people. Of these employment opportunities, 160,000 are for non-workers. skilled in rural areas, âMakgothi said during a recent webinar. .
But, she said, other than a couple of large-scale B-BBEE deals involving large, established wineries, the industry has performed relatively poorly in terms of transformation. In order to support and develop the industry, the dtic has an agro-industry support program aimed at stimulating investments by processing and enrichment companies in South Africa. The program is a 20-30% cost-sharing grant up to a maximum of R20 million, over a two-year investment period.