A bad year for SA wine exports
SA’s wine exports fell 17% to 306-million litres in 2023, in part because high inflation and high interest rates in some of SA’s key wine export markets affected how consumers chose to spend their money, says wine export promotion body Wines of SA (WoSA).
Wine exporters say also that, like the fruit exporters, they were hampered by logistical challenges at the Port of Cape Town.
In its export report for 2023, WoSA said total exports by value slumped 11% (in dollar terms) to $540m, though the rand’s depreciation meant export value increased 1%.
“Excessive stocks in both northern and southern hemisphere producing countries have hurt pricing on the whole. This can especially be seen at the lower- and entry-level segment of the wine markets, where trading [and pricing] is particularly competitive, leading to a ripple effect throughout the value chain,” WoSA said.
Apart from economic pressures that were affecting wine sales in SA’s top export markets, there was also a “normalisation” in stock levels that added to the decline in exports.
Maryna Calow, communications manager for WoSA, told Business Day that it was a combination of the lower harvest (production volume was down 14%) and the stock situation, which has normalised after the build-up of stock during the Covid-19 pandemic and restrictions on sales. “With stocks normalising, it was expected that bulk wine exports would decline to more normal levels in the short term,” she said.
Exports to the UK and Germany — SA’s two largest markets, accounting for about half of total wine exports — fell 3% and 16%, respectively (in terms of volume). The largest decline was to the US, which imported 12million litres of wine — about 50% less than in 2022.
Calow said US wine sales and consumption overall have dropped, so the fall in imports from SA was in line with the general trend.
“We are also seeing some of our competitors being impacted, for example Argentina (-28%). Most importantly, the US volume drop is heavily driven by bulk wine exports (-72%). Quite a lot of bulk went into the US in 2022 ... It is likely that the combination of SA not having a lot of bulk wine available and an improved US harvest has negated the need for bulk wine imports to supplement the US’s wine shortage,” she said.
Wine producers and
exporters, said WoSA, continue to face local challenges and are, like their peers in the fruit industry, affected by ongoing infrastructure and equipment challenges at the Port of Cape Town.
“Order fulfilment is key in the international wine business, and we cannot allow delays due to a below-standard logistical performance to tarnish our reputation as a reliable supplier of quality wine,” said Christo Conradie, stakeholder engagement, market access and policy manager at wine industry body South Africa Wine.
The organisation, together with exporters and other industry bodies, is engaging with port authorities to find short-term solutions. But, said Conradie, a long-term strategy will need to be implemented to truly negate and ultimately correct these challenges.
Business Day has previously reported that fruit farmers and exporters, through their representative organisations, fear the crisis at the port will cost the industry billions of rand in losses if there is no immediate improvement.
The industry is considering legal action against Transnet and is evaluating legal options, including a class-action suit against the utility.
WoSA said 2024 is likely to continue to see challenges for the SA and global wine industries.
11% fall in total wine exports by value (in dollar terms) to $540m