Business Maverick

SA wine industry grappling with change but resilient amid decline in global production

Information source: Wines of South Africa. (Graphic: Supplied)

22 Dec 2024

For many South Africans, the word “wine” paints an idyllic picture of a perfectly positioned glass, beads of condensation glistening against the backdrop of sunlit vineyards, inviting one to indulge in a leisurely afternoon (we’ll save the beer for those raucous evenings with the Boks).

However, underlying whatever picturesque scene you’ve imagined is the stark reality that your glass signifies an industry struggling to keep afloat amid global production declines. On the bright side, us Saffas are in the clear.

Global production declines

In late November, the International Organisation of Vine and Wine released a report projecting that global wine production would reach its lowest levels since 1961, with actual production expected to fall between 227 million and 235 million hectolitres. The reasons behind this decline are multifaceted, but are primarily driven by severe climatic challenges such as early frosts, heavy rainfall, and prolonged droughts. Organisation of Vine and Wine’s director John Barker in a statement noted an “increasing volatility” within the industry, prompting producers to adapt their sustainability strategies to combat the adverse effects of climate change.

SA harvest: a mixed bag

While South Africa’s 2024 grape harvest yielded 1,099,051 tons from 87,848 hectares — a 7% decrease from 2023 — Maryna Calow, communications manager for Wines of South Africa, asserts that the country has not experienced a significant drop in production.

“We have some of the oldest viticultural soils, dating back some 500 million years, which allows us to grow wines of true distinction,” says Calow. She emphasised that South Africa’s wine stocks are stable: “We don’t have an over-supply, nor do we have a shortage of wine stock. It also looks like we will have a good harvest in 2025,” she said. Wines of South Africa is responsible for promoting South African wine exports and setting the industry’s export promotion strategy.

Calow also highlights a crucial point — globally, wine consumption has fallen, leaving some producers with surplus stock they cannot sell at profitable prices. France served as a stark example, said Calow, pointing to the European Union providing approximately $172-million to France to destroy enough wine to fill 100 Olympic-sized swimming pools in response to rising prices amid declining consumer demand.

Echoing Calow’s sentiments, Wines of South Africa chief executive officer Siobhan Thompson pointed out that “the decline in production runs parallel to the decrease in consumption”. She notes that Wines of South Africa’s export strategy had undergone a significant overhaul in 2024. In 2025, the focus would be on enhancing the industry’s position in export markets by highlighting both the quality and value of South African wines.

The 2024 harvest was characterised by the convergence of a series of climactic events that played out at a regional level. In terms of the yield, regional trends were varied which could be attributed to the local impact of unique factors such as frost, heavy winter rainfall, floods, wind, and low summer rainfall. Source: Vinpro Technical Harvest Report 2024 and South African Wine Industry Statistics. (Table: Supplied)

“We will be pushing South African Chenin Blanc, Pinotage and Cap Classique as our three main categories that highlight these elements best, and will act as a strong entry point and differentiator in key international markets,” said Thompson.

However, Rico Basson, the chief executive officer of South Africa Wine, acknowledged that “the export landscape presents significant challenges”, including logistical bottlenecks at ports and market access barriers. He stressed the need to differentiate South African wines globally while moving up the value chain through premiumisation. South Africa Wine served as the umbrella industry body encompassing various stakeholders involved within the wine sector.

Industry challenges

Basson outlined several headwinds facing the industry, including low producer profitability with a concerning return on investment below 1%, port logistics challenges affecting exports, and rising input costs across the value chain. However, he stressed that environmental sustainability and climate adaptation had become non-negotiable due to water scarcity and changing weather patterns.

“Access to key resources — notably water security, financing options for growth and transformation, and reliable packaging supplies — remains a persistent challenge that requires coordinated industry action and government support,” he said.

Solutions for growth

South Africa Wine plays a critical role in crafting solutions.

“We focus our energy and expertise on several key areas to boost profitability from its current return on investment,” said Basson. He emphasised prioritising farm-level efficiencies through mechanisation and precision farming while securing beneficial global market access through trade agreements.

A deliberate shift toward premium wine segments in international markets could help capture higher margins, he added. Additionally, wine tourism presented an untapped opportunity for exponential growth through cellar door sales and integrated tourism experiences. However, in order to improve the product within the domestic market, producers needed to shift consumption patterns toward higher-value wines and develop new consumer segments, said Basson.

Adapting to climate change

It was essential to maintain ongoing efforts to support growers technically, according to Dr Etienne Terblanche, a viticulturalist and Vinpro consultation manager. Initiatives like the annual Production Plan allowed producers to benchmark costs against top performers in their regions, he said. Vinpro’s innovative Gen-Z Vineyards project aimed to “supply the industry with pragmatic information on new cultivars… and management techniques” to enhance resilience against climate change, said Terblanche.

Information source: Wines of South Africa. (Graphic: Supplied)

Producers were adopting water-efficient practices such as drip irrigation and rainwater harvesting to experiment with climate-resilient grape varieties. Integrating agroecological practices improved soil health and promoted biodiversity, said Terblanche.

Paving the way forward

What was clear was that the South African wine industry faced a complex landscape comprising significant challenges alongside promising opportunities. Producer profitability was under severe pressure due to rising input costs, making reinvestment in vineyards and technology difficult, said Basson. He added that “the industry simultaneously grapples with critical skills shortages”, pointing to a need for improved education and training programmes to attract and retain talent.

“Overcoming these interconnected challenges requires a collaborative effort from all stakeholders,” said Basson, underscoring the importance of unity in securing future sustainability within the wine sector. DM

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