South Africa must stop selling bulk wine at "pathetically" low prices
South Africa’s wine industry needs to ‘wake up” to the problem of selling its bulk wine at “pathetically low” prices.
This is according to Vinpro's chairman Anton Smuts, who pointed out that around 14% of South Africa's bulk wine is sold for less than R4 per litre while water sells for between R5 – R6 per litre. "This must be changed” he said earlier today at the trade body's annual conference.
While the state earns R6.8bn from the wine sector, producers themselves only receive around R5.8bn. Smuts urged the industry to be robust in its actions, adaptable to change, globally competitive and profitable.
“The link between low bulk prices and globally or regionally strong brands that command higher prices is what needs to be tackled,” tweeted co-owner of Stellenbosch-based Rascallion Wines Ross Sleet. “You can’t fix one without the other.”
South Africa sells over one million bottles overseas every day, with full certification and ethical codes, and producers should “make every single bottle count as an ambassador for Brand South Africa,” said Smuts.
Delegates heard that one wine producer leaves the industry every two weeks because of financial pressures – in 2001 there were 4,390 growers, and within 15 years their numbers had plummeted by 30% to fewer than 3,100 last year.
At the same time producers need to invest roughly R13bn over the next 10 years to be able to replace 50% of those vineyards that are currently older than 16 years of age, added Smuts.
“Wine investment versus returns is still he major South African wine industry challenge,” tweeted WOSA's Pippa Carter.
One of the answers, according to Mark Norrish of Ultraliquors, was for South Africa to produce more premium wines “I believe South African needs to produce more iconinc or cult wines to gain further international exposure and grow awareness of South African wines.
However, despite the challenges facing the industry, growers should feel confident, said agricultural economist Wandile Sihlobo, pointing to South Africa’s economic growth, the net operating income of agribusinesses, volume of exports and general agricutlral conditions. “We have a confidence crisis,” he said. “Business confidence is the cheapest form of stimulus to the economy.”
As for the 2019 vintage, Vinpro’s Francoise Viljoen reported it is “looking positive” with the cooler conditions and was expecting average to lower yields and generally healthy grapes, though vineyards will take some time to recover from the drought.