VinPro data shows 15% of wine grape producers are profitable, 55% are at break-even and 30% farming at a loss. Cellars struggle to obtain wine prices above those needed to break even.
SA's nearly 100,000ha of vineyards generate about 3% of the world's wine production. Wine producers in the Western Cape, SA's main wine-producing province, are facing a harsh season due to drought and heat. Early indications are that the harvest will be smaller this year, although VinPro predicts a higher quality.
Farmers in the province are also counting their losses after fires destroyed 3,000ha of vegetation and vineyards. Grapes were also contaminated with smoke.
Speaking at a conference organised by VinPro and Nedbank at the weekend, VinPro's wine cellar division manager Christo Conradie said input costs were rising sharply, with income not keeping up.
VinPro managing director Rico Basson said the industry could only grow its market share and value if industry members worked together. "There are still too many wineries who fight for the same shelf space on their own, not realising the power that collective efforts can have on building Brand SA."
Jane Robertson, category development director at Accolade Wines in the UK, said SA could make its wines more appealing by creating a "credible mid-tier". "Get the retail gatekeepers on your side and use native varietals such as Chenin Blanc and Pinotage as heroes to set your wines apart," Robertson said.
Nicky van Hille, director of Cape Town consulting firm The Moss Group, said the industry can grow the local wine market by changing the way it talks to consumers. Many find wine intimidating and the number of brands overwhelming. "Simplify wine and innovate packaging to get South Africans to drink it compared to other drinks," said Van Hille.
The Western Cape wine industry estimates that the fires cost R240,000/ha of vineyard lost.
Source: Business Day
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