The UK is South Africa’s most important market and the proposed exit from the European Union has done SA no favours. Doran Vineyards’ Edwin Doran says: “Brexit has raised its ugly head reducing the rate of exchange from ZAR22.4:£1 to today’s ZAR17.52:£1. We are a niche market, premium operation which offers top-quality wines at exceptional value-for-money prices. But a drop of 22% makes life difficult.”
Gerhard van der Watt, chief executive of the Perdeberg Group, says: “The greatest threat to the current growers is the low financial returns on their grapes that growers have received for some time now. The result is a net reduction in vineyards for many years and it is currently in an exponential decrease trend with all predictions that it will continue. Notably 42% of all SA vines are older than 16 years – a further testimony to the inability to renew vines and a pointer to many more extractions to come. Unfortunately SA has never really been able to establish better prices for its wines and, in world terms, is languishing in the dirt-cheap segment overall.
Jordan Wines’ Gary Jordan says: “Fluctuating exchange rates makes it very difficult to budget accurately, with swings of up to 30% this year not uncommon. While the official inflation rate hovers around 6% it is important to be able to raise the average prices of SA wines internationally so that wages and salaries of farm staff may be increased, and to provide capital for projects where all the staff in the company benefit.”
Boutinot Wine’s South Africa wine-maker Marinda Kruger-Van Eck says: “The greatest challenge for SA grape growers is to stay sustainable and profitable. Higher wine prices do not always reflect down to the grower.
“We can produce healthy yields with good profitability but the challenge is to keep on producing wine of quality that exceeds price point, as there are always market opportunities for exceptional price/quality wines. The huge press momentum around young winemakers and old vines helps SA break new markets – it’s cool.”
Eikendal co-owner Chris Saager says: “We need to get rid of the cheap wine stigma that is connected to SA. If we can achieve this we will be able to start achieving the prices our wines deserve.
“SA has managed to increase quality quite dramatically in the past 10 years because our industry is not as regulated in what you can produce. We can be very innovative and we are able to adapt very quickly to new trends and styles.”
Lammershoek Farms & Winery’s operation is based on small yields, so marketing and sales manager Zaine Pritchard says it is not in a position to “play the price game”. He is also concerned at the effect of shipping too much SA wine in bulk.
He says: “The balance of bulk and bottled wine has a direct and very strong effect on our perceptions in the global market.
“We must do everything in our power to ensure we are not seen as just a cheap option but that quality is pivotal at competitive pricing – but for this to work all parties and businesses need to buy in.”
Pritchard calls for a “charter for both bulk and bottle, ensuring we all sing off the same hymn sheet”.
