South African wine producers remain under pressure with nearly 40% operating at a loss. And it’s a situation that has not been helped by the recent drought in the Western Cape, communications manager of Wines of South Africa (Wosa), Maryna Calow, told the Exporters’ Club Western Cape recently. She said in the past 10 years South Africa had lost 10 000 ha of vines and 1000 producers due to the lack of sustainability of wine making. “Farmers are pulling up
their vines and planting citrus, apples, berries and nuts. It is not only a lot easier than wine making, but also more lucrative. The challenges are there. They are real,” she said. In 2017 a total of 37% of the country’s wine producers were operating at a loss, while 2% were breaking even. A further 47% managed to secure low profits with only 14% of the industry being sustainably profitable. It is estimated that more than 80% of South African wine producers are farming below a sustainable net farm income of R30 000/ha. “This is a very depressing
picture of the wine manufacturing industry and we have to make some dramatic changes going forward to turn the sustainability of this industry around,” said Calow. South Africa currently ranks as number seven in the overall volume production of wine in the world. In 1992 the country was exporting around 22 million litres of wine per year. This has steadily increased to the current 420.2 million exported last year. But, said Calow, with wine production costs increasing and South African producers still selling their packaged wine for as little as R19.99 a bottle on the international market, the sustainability of wine producing in the country was under threat. “At R20 a bottle a farmer is simply not making a profit,” she said. According to Vinpro, bulk wine is sold internationally at an average price of R5.50 per litre. Nearly half of packaged wine trades at less than R30 per litre. According to Calow it is impossible to remain sustainable at these price points. Also, she said, while there would always be a place
for bulk exports, it was of increasing importance that South Africa reduce the bulk export of wine and increase the export of packaged products. “At the moment around 60% of our wine is exported in bulk, but we have to package more of our wine locally,” said Calow. Not only was it important from a manufacturing point
of view, but also as a country brand. “The brand South Africa message is lost when we export our wine in bulk. It is mixed with wine from all over the world. The wine that does get bottled as South African wine is often also not representative of the quality of South African wine. The fact is with bulk exports the bigger picture of what we have in South Africa fades away.”
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In 2017 a total of 37% of the country’s wine producers operated at a loss, while 2% were breaking even. – Maryna Calow
