Value of wine exports up despite drought in Western Cape
Producers dwindle but positive sentiment towards SA wine sees revenue increase
The value of wine exports grew by 4% in 2018, despite a difficult season and a long-term trend of producers dwindling.
The value of exports grew to R9,6bn, says industry association Wines of SA, despite a low-yielding harvest due to the regional drought.
Wine is one of SA’s largest agricultural exports, with nearly 100,000ha of vineyards, mostly in the Western Cape, accounting for 4% of world production. The industry contributes R36bn to GDP and employs nearly 290,000 people.
It has faced strong headwinds in recent years including the drought in the Western Cape and increasing production costs.
There are 25% fewer producers than a decade ago, according to wine producers body VinPro. It says the only way to ensure sustainability is for farmers to increase prices they receive for wine.
Vinpro previously reported that many wine-grape farmers were either leaving the industry, uprooting vines for more profitable crops or not replacing vineyards. The Bureau for Economic Research and the Bureau for Food and Agricultural Policy predict that at 85,000ha, the area under wine grapes will be about 10% smaller by 2022.
Value of exports
Wines of SA CEO Siobhan Thompson said: “We have proven that we are indeed producers of world-class, high-quality wines and deserve to have this reflected in our bottom line.”
The increase in the value of exports arose from Wines of SA’s strategy for an increased focus on packaged and bulk wine sales, she said. The value of packaged wine increased by 3% and that of bulk wine by 7%.
In SA’s focus export markets, Wines of SA noticed good growth on the value of packaged wine to China at 7%, while the US remained flat. The US market has always been stronger in terms of their procurement of more premium-priced wine.
In the European markets, which have seen very little value growth of packaged wine for a number of years, there was a notable value increase on all fronts, Wines of SA said.
Exports to other African countries increased with Kenya, Tanzania and Zambia showing strong growth as values of total exports grew by 73%, 35% and 33% respectively.