Undervaluation of wine exports at the heart of struggles in industry

The industry needs policy clarity and a unified approach to compete with bigger players such as AustraliaAs a relatively small industry, we shouldn’t be drifting near the bottom tier of the global shelf, especially given the quality of some of our wines, says the writer. 123RF/ JOZEF POLC

Furthermore, with the advent of democracy in the early 1990s, a rapidly growing community of SA wine producers, enthused by the novelty of market access, extended their brands and underpriced their wines on global markets. Spurred on by a bullish export market, increased demand and potential for higher fruit prices, certain areas such as the Swartland engaged in ambitious planting schemes. The effect has been devastating.

According to VinPro’s Christo Conradie, by 2017 SA wine exports represented the lowest value out of all mainstream wine producers, at a staggeringly low aggregated global market price point of €1.27 for a volume of just over 500-million litres . This compared with new world counterpart the US’s global aggregated export market price of €3.80 at a volume of 380-million litres .

On the market side, one of the first things we need to address is marketing capital. Right now, we’re simply not putting enough of it behind our country brand. The marketing budget for Wines of SA, a not-for-profit industry organisation established to promote SA wine in international markets, is about R50m, funded by industry levies. Australia’s equivalent, Wine Australia, utilises a budget of some A$50m .

On the nonmarket side, arguably the most strategic area for the wine industry to engage at this stage, is the seeming lack of cohesion at the top of the policy chain. There is a need to start creating a single voice and resonant identity for the SA wine brand, for which there have been calls. This might include reducing the number of brands to market. SA enjoys plenty of diversity in terms of output, but this isn’t necessarily a good thing.

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