Price rises for South African premium wines "essential" according to industry leader
Significant prices rises for premium South African wines are “essential” for long term sustainability according to a prominent figure in the industry.
"It is time for the leading players in the industry to realise that South Africa must not be seen as the number one destination for cheap and cheerful wine," said Greg Guy, international director at DGB, speaking to Harpers. Adding that higher prices are “most definitely” needed, he said that there was resistance from gatekeepers who pass the blame onto the consumer who they claim are prepared to pay more for SA wine.
The 2019 harvest in South Africa came after three difficult years in which drought was omnipresent. The 2019 vintage was different, however, with many of the Cape’s key wine producing regions having to contend with cool windy conditions during fruit set, resulting in smaller berries and fewer bunches.
The impact of a smaller harvest - the lowest total yield since 2005 - meant that grower price rises were "inevitable", according to Guy. "We mustn't be scared to ask for higher prices as our wines are good enough to demand these prices. Market research that shows South African wine is seen as very favourable; I think it is a chicken and egg situation whereby if the retailers gave a bigger share to SA wines at higher price points (and I'm not talking a lot - just shift each category by a pound or so) then I'm sure they would deliver as they still over-deliver in terms of quality," he added.
However, the overall value of South African exports has grown in recent years, with figures released by Wines of South Africa in January showing that the total value rose to R9bn, while volumes fell due to the smaller size of recent vintages.
Growth was recorded in both the value of bottled exports (3%), and bulk wine exports (7%) with the UK remaining South Africa’s top export market in value terms. Over half – around 55% - of South African wine exported in 2016 was in bulk, according to the OIV.
"Relatively few private cellars in the Cape actually make a healthy profit," said Hylton Appelbaum, owner of DeMorgenzon, adding that while he couldn’t give an exact figure, the widely accepted one is that a mere 10 – 15% of wineries currently make any money at all.