Although South Africa’s 2022 wine grape crop estimate, at 1.37-million tonnes, is 5.5% smaller than in 2021, it is still larger than the five-year average of 1.34-million tonnes, says industry body Vinpro.

The smaller wine grape crop this year can be attributed to a decline in the overall vineyard area, owing to the uprooting of vineyards, disease pressure caused by untimely rainfall just before or during harvest time and isolated cases of sunburn during heat waves in certain areas.

Vinpro notes that the 2022 season will still provide consumers with exceptional quality wines, albeit from a slightly smaller grape crop.

“A cool season and moderate weather conditions in most regions during harvest time slowed down ripening, which gave vines the opportunity to develop stunning flavour and colour in this year’s wine grape crop,” explains Vinpro consultation service manager Conrad Schutte, adding that the harvest time was delayed on average by 10 to 14 days.

Wine production for 2022, including juice and concentrate for non-alcoholic purposes, is expected to amount to 1.07-million litres, at an average recovery of 778 ℓ/t of grapes.

Meanwhile, Vinpro says wine producers’ profitability remains under significant pressure owing to the sharp increase in input costs in recent months, while consumer spending and wine prices remain low.

For example, grape producers’ input costs have increased by an average 7% every year over the last decade. In 2022, a 14% increase at farm-level input costs is expected, owing to a global exponential rise in energy, chemical and fertiliser prices.

Vinpro MD Rico Basson says shipping and packaging costs have also “gone through the roof” owing to global infrastructure and shipping constraints.

Although global and local sales volumes recovered to pre-Covid levels, the industry still carries excess stock of about 200-million litres. Average price increases for grapes and wine are, therefore, expected to remain below the consumer price index of 5%.

“The industry is allocating product to the non-alcoholic segment in a bid to reduce the surplus, exporting more wine for alternative uses (including cocktails, vinegar and food) and awaiting approval from the regulator to use wine grapes as a base for ciders,” says South African Wine Industry Information & Systems (SAWIS) executive manager Yvette van der Merwe.

She adds that, while the 2022 harvest is smaller and SAWIS remains hopeful that consumption picks up, prices will likely only start stabilising towards 2024.

“Although financial pressures may hamper much-needed reinvestment as seen in the decline in vine renewal rates, forward-thinking companies are navigating the challenges through consolidation, renewed capital expenditure and foreign direct investment,” Basson notes.  

He believes there is an opportunity in getting the industry cultivar mix right, including planting the right vines in the right areas.

“Brands with sound business models, including distribution and market access, also tend to outperform their peers,” he adds.

TOURISM RECOVERY

Vinpro further reports that wine tourism contributed R4.1-billion to gross domestic product (GDP) in 2021, and is expected to reach R5.7-billion in 2022. This compares to a contribution of R7.2-billion to South Africa’s economy in 2019 and R2.7-billion in 2020.

The industry is inching its way back from complete loss of the international market during the height of Covid-19, Vinpro confirms.

Vinpro wine tourism manager Marisah Nieuwoudt states that, although international visitor figures remain low, especially for mid-week travel, there is positive energy among wine tourism destinations. We are seeing new hirings, product launches and events,” she elaborates.