The South Africa wine industry has taken great strides forward over the past decade, with the quality of South African wine stepping up several notches and earning international respect.
The shape of the wine industry has changed, becoming tighter and more efficient, with fewer wine producers producing better quality wines. Statistics from the SA Wine Industry Information and Systems (SAWIS), reveal a shrinking number of vineyards, while the number of primary wine producers has decreased, standing at 3 314 in 2014. But despite the contraction, winemakers have clearly honed their craft.
“The quality of the vineyard has changed dramatically over the past ten years. It’s more efficient. Properly trellised vineyards have replaced low-yielding bush vines. The net effect of this is that we are producing more good wine and less distilling wine,” says Michael Fridjhon, RMB WineX show director and renowned wine critic.
The quality has been recognised in a wave of optimism from internationally acclaimed wine critics and journalists.
“Overall it’s an incredibly exciting time for South African wine, and gratifyingly, overseas wine influencers are also recognising this in their writings and ratings, some going as far as to declare South Africa among the most exciting and dynamic wine countries in the world,” says Philip van Zyl, editor of Platter’s South African Wine Guide.
Export-wise, South Africa has extended its reach and become more popular in less traditional markets, like China. Wines of South Africa (WOSA) recently opened its Asian offices in Hong Kong, with South African wine exports to China doubling in the past year.
VinPro, which represents over 3 000 wine producers and cellars, lists the country’s top wine markets in 2014 as the UK, Germany, Russia, Sweden and France. According to SAWIS, the past ten years have seen a marked increased in exports, moving up by nearly 58%. Growth has slowed down in the last five years, with a rise of 6.9%, while 2015 compared to 2014 actually recorded a decrease of 2.2% in exports.
Despite the drop over the past year, Fridjhon believes the industry is holding its own, as it is able to compete favourably on quality with its international competitors.
“The South African industry is innovative and cutting edge and becoming very popular. It’s making inroads in terms of visibility internationally. We are making much better wine…more authentic wine…wine that speaks more of place and is idiosyncratic. There’s no question about it,” says Fridjhon.
VinPro views the 2015 vintage as a winner.
“The 2015 vintage is viewed as one of the most promising vintages of all time in terms of quality. Total production ranges between 1 000 and 1 200 million litres,” says VinPro managing director, Rico Basson.
Chenin Blanc is South Africa’s most popular wine export, followed by Sauvignon Blanc, Chardonnay and the pink wines of rose and blanc de noir, says Van Zyl. At 18% of the national vineyard, Chenin Blanc is the most widely planted variety, followed by Cabernet Sauvignon at 11%, Sauvignon Blanc at 9% and Chardonnay at 7%.
A growing number of wines are finding their way into the soon to be released Platter’s Guide: 2016 edition. The guide lists 8 000 wines in the 2016 edition, up from 5 400 in 2006.
Van Zyl says a new generation is taking the reins in the vineyard and the cellar, as well as in wine tourism.
“It’s making its presence felt via the injection of youthful energy and drive, the application of overseas experience and a fresh set of ideas, and respect for South Africa’s wine-growing heritage, including forgotten and out-of-fashion grape varieties, and old vines. The goal is to make wine as natural as possible so as to fully express the character of the grape and vineyard sites.”
Transformation is taking root in the industry. VinPro says there are at least 60 black economic development initiatives on wine grape properties in South Africa.
But ownership is slower. Unlike some of their fiercest international competitors, South African wine farmers do not receive subsidies. They also currently don’t boast the same free trade agreements as key competitors like Chile and New Zealand. Breaking into the market is both tough and expensive.
“It is quite difficult to accurately express black ownership as a percentage, as some vineyards are also owned by companies and businesses. There are about 100 000 hectares planted to vines, which means that broadly speaking 2.5% of vines are under black ownership,” says Basson.
The industry is a very tough one to get into. The average return on investment for wine grape producers is 2%, which is significantly lower than many other crops. Basson says this is partly why many primary producers are diversifying by planting citrus or other high value crops.
A very positive move has been the significant investment in training, with 2 600 vineyard and 300 cellar workers at NQF 1 level receiving training every year. At least 20% of industry funds obtained through export levies and investments are set aside for transformation efforts.
In a move towards enhancing collaboration with government, the South African wine and brandy industry is to launch the WineBiz desk in November. It will strengthen relationships with various national government departments and related stakeholders on issues such as water and land reform, transformation, trade facilitation and market access.
This article is part of a series sponsored by RMB WineX. Moneyweb readers qualify for a special discount on RMB WineX tickets: click here to book with the discount code: MONEYWINEX2015