WeeklySA_AdminMARKETS: Value growth achieved despite 17-percent decline in export volumes during a challenging world economy last year…
By WSAM Reporter
South African producers witnessed a positive value growth of total exports to an impressive US$540 million (R10 billion), weathering the storm of the year 2023 when they experienced one of the most challenging years.
This is despite the industry having seen a volume decline of 17 percent, representing a drop of total export volumes of 306 million litres, Wines of South Africa (Wosa) said in a statement yesterday.
Wosa said the year 2023 would undoubtedly be remembered by the world’s wine fraternity as one of the most challenging years. However, the silver lining for South African producers could be seen in the positive value growth of total exports to a respectable US$540 million (R10 billion), despite the volume decline.
Actually, South Africa was not alone in weathering the storm of a decidedly difficult wine trade year. In fact, the 2023 trend was felt across the international wide trade. If 2022 was characterised by rising annual inflation levels and a supply chain crisis, 2023 will be remembered for interest rates rises and slow buyer demand world-wide, according to the Ciatti Global Market Report, which looks back at the year just passed and ahead to the new one. In 2023, inflation levels, and the interest rates increased to curb them, reined-in consumer discretionary spending in key markets, according to the Ciatti Report.
“Many distributors and retailers were still working through wine inventories they had accumulated during the pandemic’s consumer demand spike, or supplies that had only recently arrived after 2021/22’s shipping delays. They also pushed back against wine suppliers seeking to increase prices in order to maintain margin. Consequently, bulk demand was slow and, when it did occur, transactions often took time, were price-sensitive, and only for limited volumes,” the report said.
Meanwhile, Wosa said Harvest 2023 saw production volumes decline by 14%, a scenario echoed by the OIV report which highlights smaller harvests globally for the year.
“However, the realities of excessive stocks in both northern and southern hemisphere producing countries, has had an adverse effect on pricing on the whole,” Wosa said. “This can especially be seen at the lower- and entry level segment of the wine markets where trading is particularly competitive and pricing within this commodity sector leading to a ripple effect throughout the value chain”.
Despite these challenges, South African wines are still making waves internationally with continuous positive recognition from critics such as Tim Atkin, MW in his latest South African report and Anthony Mueller’s latest report on the Wine Advocate platform. It is this reputation for top quality wines that seem to be setting South African wines apart from many of our counterparts and fueling the positive premium growth trajectory.
“The consistent positive ratings and accolades achieved by South African wines has most certainly solidified our positioning in international markets. Quality remains our focus and the consistency that we have seen, along with viticultural improvements, embracing new technologies both in the vineyards and cellars, will allow for the continued upward trajectory in this regard. This is why buyers remain confident in their support of our wines,” comments Wines of South Africa CEO, Siobhan Thompson. She adds, “Thanks to our unique terroir, our producers are known for making wines that are unique and representative of our rainbow nation.”
In addition, South Africa’s wine tourism was projected to have further bolstered growth, adding to the overall sustainability of, particularly, the small and medium-sized entities, Thompson added. In an upcoming report following a wine tourism impact study (due for release on 1 February 2024), preliminary figures had shown exponential growth in numbers and turnover at cellar doors with full recovery following the Covid pandemic. This growth could be accounted for by both local and international visitors to the Cape winelands.
South African white wine continued to win the popularity contest with Sauvignon Blanc leading the charge, followed by Chenin Blanc and Chardonnay. All three cultivars were also showing solid value growth. On the red wine side of things, Shiraz takes the lead, closely followed by Pinotage and Cabernet Sauvignon.
Producers continued to face several localised challenges, such as the ongoing infrastructure and equipment challenges at the Port of Cape Town, which has had a major impact on all products and commodities that are heavily reliant on this harbour. Newly formed wine industry body, South Africa Wine, together with exporters, were continuously engaging with port authorities and have taken a proactive approach in finding ways to support producers in this regard, however a long-term strategy will need to be implemented to truly negate and ultimately correct these challenges.
Looking ahead, the year 2024 would continue to see challenges for the local and global wine industries as geopolitical pressures will continue to play a major role in the world economy.
However, the Ciatti report was more buoyant in its forecast, saying the United States, United Kingdom and Eurozone were all coming into 2024 with consumer confidence at higher levels than for some time, “as annual inflation steadily declines and interest rates are expected to slowly fall through the year”.
Consequently, it said, the year 2024 arguably started with more glimmers of hope than its predecessor.
EVENTS
1659 COMMEMORATIVE DINNER
The Wine Harvest Commemorative Event, widely regarded as the most prestigious wine event in the country, will once again grace the historic estate of Groot Constantia on February 1 to mark the beginning of the South African wine industry. It is an occasion that not only seeks the blessing for the new harvest but also serves as a powerful tribute, acknowledging those who have profoundly contributed to the industry’s success.
A highlight at the event will be the conferring of the 1659 Award for Visionary Leadership, a highly regarded accolade commemorating the year when wine was first produced from Cape grapes, to a deserving Cape winelands trailblazer. This award highlights the accomplishments of those who have significantly impacted the wine industry. Last year, Ken Forrester, known worldwide as Mr Chenin, received this recognition. The dinner, which starts at 19h00, costs R1150.
TASTE CONSTANTIA
Cape wine lovers are expected to attend Taste Constantia to celebrate 336 years of world-class wine-making in the valley at the Kirstenbosch Gardens on February 3.
On the day, nine wine estates of Constantia will gather on the marquee lawn to conduct tastings for the guests at the annual show. Elsewhere on the Cape winelands, various events to mark the birthday of the SA wine industry will take place a day before on February 2 before similar celebrations in Constantia, where it all began.
Constantia is a unique, pristine wine growing region consistently producing wines that show freshness and elegance. Discover the beauty of Constantia wines with friends under the summer sky, with delicious food and live music. Tickets cost R500 per person (no U18’s) and include a welcome glass of Cap Classique and 10 wine tasting options. Food and wine can then be purchased to enjoy on the lawns, whilst enjoying the live music. The show starts at 4pm until 9pm.
CAPE WINE AUCTION
The annual Cape Wine Auction (CWA), South Africa’s premier annual charity event, returns with passion and purpose to host yet another event at Muratie Wine Estate on February 3.
The event – the social calendar event of the year – is a global showcase of South Africa’s finest wines and a chance to buy things that money can’t ordinarily buy – all for a great cause. The Cape Wine Auction 2023 raised almost R8 million at a spectacular event at Hazendal Wine Estate. This amount – together with the R117 million that has been raised since the first auction was held in 2014 – means that the wine charity auction has amassed a staggering R125 million since its inception.
Each year the event is held in a different farm, giving guests the chance to explore new and magnificent venues. Ticket to the event costs R7 500. It starts at 12,30pm.
BUBBLY IN GQEBERHA
Bubbly Tasting Festival, Gqeberha’s calendar event of the year returns to sizzle the Eastern Cape coastal town’s revellers with a flotilla of sparkling wines from the country’s illustrious wine estates.
The event will take place at Bridge Street Brewery, 1 Bridge Street, South End.
The organisers have invited locals to come mingle with friends as they sample some of the top Cap Classiques, Champagnes and Prosecco in the country.
Tickets cost R300 per person and include a champagne glass & 20 tasting coupons. And the dress theme is gold and white. A portion of proceeds will be donated to Save-a-Pet for the sterilisation project.
‘LIVE’ AT MURATIE
Muratie Wine Estate will host Sunset Sweatshop, a ‘feel-good’, purely South African band that seamlessly blends their unique style with distinctive local flavour, on its Cape winelands farm on February 10.
The group infuses their music with rich cultural influences, creating a musical tapestry that celebrates the beauty and diversity of South Africa.
The Muratie team has called on friends and family and head to the farm to enjoy a spectacular day featuring the innovative and eclectic band’s high-octane energy and soulful melodies, great company, yummy food and superb wine. The event starts at 11am and ends at 5pm.
