The South African wine industry was hit hard by the Covid-19 pandemic and will take a few years to fully recover, but wine businesses are changing the way they do business and the industry has fast-tracked tools aimed at becoming more robust, adaptable, competitive and sustainable, wine industry organisation Vinpro says.
Wine businesses have endured. The industry has managed to reduce the uncontracted wine stock from 200-million litres at the end of 2020 to 60-million litres at end 2021, in part by allocating wine grapes to grape juice concentrate.
This, along with a smaller wine grape crop, may relieve downward price pressure. Wine export volumes and value have also shown good growth in 2021, particularly in traditional markets such as the UK, while diversifying into the US, China and Africa.
“While we commend our producers and cellars for their resilience and tenacity, without innovation we cannot move forward. The wine industry has a clear growth path towards 2025 in the Wine Industry Strategic Exercise, which will, in close collaboration with relevant government departments and other stakeholders, create an environment for recovery and growth,” says Vinpro MD Rico Basson.
“The wine industry still faces harsh realities while recovering from the after-effects of Covid-19. Glass shortages, export and import challenges at Cape Town harbour, the contrast between a 15% spike in farm cost inflation and a 3% to 5% wine price increase and a growing illicit market are some of the issues that have a significant effect on the entire wine value-chain.”
The wine industry is one of the most important industries in the Western and Northern Cape, and South Africa's wine industry contributes R55-billion to the local economy and employs close to 269 000 people, says financial services firm Nedbank national head of agriculture John Hudson.
“However, for the South African wine industry to survive and thrive, it needs to move to a premium positioning in the global market, focus on inclusive growth and strive for environmental and financial sustainability. Together with Vinpro, Nedbank is working hard to guide our wine producers, whom we view as resilient, resourceful and innovative, towards these goals,” he emphasises.
Meanwhile, South Africa is a world leader in the field of traceability and environmentally sound practices through its Wine of Origin and Integrated Production of Wine schemes.
“We need to talk more about these and our other strengths to change consumer perceptions about sustainability,” says wine producer Bruce Jack Wines owner Bruce Jack.
“The wine industry has what it takes to drive sustainability, but needs a unified framework to drive this forward. The wine industry and businesses should start by selecting a set of the United Nations Sustainability Goals that are attainable within their context and build success stories around them,” says drinks multinational PepsiCo communications, public policy and government affairs VP Bridgitte Backman.
“Apart from people, planet and profit, we should consider the purpose, why are we doing what we are doing, and make these elements part of our foundational processes,” she says.
Additionally, wine grape production is a long-term investment, which should be preserved for future generations, and producers should look at smart production trends to ensure a secure future, says Vinpro consultation service manager Conrad Schutte.
“Plant the right cultivars for your wine goal on the right sites while considering drought-tolerant rootstocks, cultivars and clones. Use water more efficiently by implementing monitoring systems that continuously measure if, when and how much you should irrigate.
“Similarly, continued restrictions on the use of certain herbicides and fungicides have necessitated producers to look at regenerative and biological control measures,” he says.
Smart wine grape producers also invest in their people through training. Vinpro provides annual vineyard worker sessions and its online learning platform will be launched in the coming months, adds Schutte.
Meanwhile, South African and global wine sales volumes have started recovering, but not yet to pre-pandemic levels. However, the wine category can take its cue from consumer trends linked to strong growth in ready-to-drink product sales, says Wine Intelligence CEO Lulie Halstead.
Wine producers should consider the serving size, style, packaging and the fact that ready-to-drink products are usually chilled, carbonated and mostly blends, she says.
Further, the regular wine-drinking population is decreasing, but consumers are becoming more engaged and premium-oriented, supported by an increase in at-home drinking occasions. Millenial and Gen-Z consumers are driving a trend towards drinking in moderation, and no- and low-alcohol wines are here to stay, she says.
“E-commerce channels are also forecast to grow and evolve, with online delivery apps becoming more popular and providing a great tool to build brand awareness,” highlights Halstead.
Meanwhile, wine tourism is one of the key drivers of the industry’s strategic growth plan, which aims to attract international visitors and expand wine’s local fan base throughout all wine regions to grow revenue, create employment and upskill staff, Vinpro wine tourism manager Marisah Nieuwoudt says.
Wineries can improve their competitiveness by benchmarking themselves against existing and future wine tourism intelligence figures in terms of composition, visitor statistics, expenditure and more.
“A free online Wine Tourism Toolkit can also help wineries develop their signature experience, while resources and workshops on direct-to-consumer marketing and sales provide clear guidelines on how to engage with consumers and visitors.
“Following a skills audit, a learning and development strategy for wine tourism kicked off at the end of 2021 to help wine tourism destinations increase the capabilities of their people,” she adds.
Additionally, one of the unexpected positives of Covid-19 was that it opened up a dialogue between the industry, government, labour and civil society, which helped drive support for initiatives aimed at fast-tracking inclusive and sustainable growth.
“Enterprise development will be a core focus area in 2022, while learning and development initiatives will ensure that we not only attract the right talent, but ensure that they have the right skills to match our needs. South African wines should also come from farms that are socially compliant,” advises South African Wine Industry Transformation Unit chairperson Ronald Ramabulana.
“The South African wine industry will again reach its full potential and rebuild towards being stronger, more sustainable, robust and competitive. However, we need to be introspective in terms of our choice of business models and turn challenges into opportunities,” says Vinpro chairperson Anton Smuts.
“We need to be determined in our outlook, refocus our thoughts and be more innovative to adapt to the changes taking place around us every day,” he says.