Following a few very tough years, the South African wine industry is optimistic on the back of record export levels, good prospects for this year's harvest, the penetration of new markets, and growing praise from high-profile wine critics, says Wines of South Africa CEO Su Birch.
South African wine exports for 2012 reached 417-million litres, 10-million litres more than the previous record of 407-million litres achieved in 2008 and a 17% increase on volumes in 2011, Birch said on Monday.
"The record levels are the result of a more favourable currency, as well as the global shortage of wines, stemming from a significant drop in the recent harvests of competitor wine-producing nations in Europe, Latin America, Australia and New Zealand," Birch said in a statement.
Third-biggest crop forecast
Birch said all indications were that this year's local crop could be the third-biggest in recorded history. "This is assuming that good weather conditions continue, there is a speedy and peaceful resolution to the farmworker strikes, and harvests come in on time.
"The anticipated crop size is despite a decrease in total plantings, thanks to one of the best winter seasons in the Western Cape for many years."
The South African Wine Industry & Information Systems (Sawis) has anticipated that the 2013 wine grape crop should amount to 1 384 357 tons.
Bulk vs packaged exports
Birch said that while bulk (i.e. non-packaged) exports accounted for 59% of volumes in 2012, this was in line with a growing global trend. She explained that over the past decade, bulk wine exports from the major New World wine-producing countries had risen from around 20% to over half of wine volumes traded, against the background of protracted recessionary market conditions.
"The reality we face also confronts Australia, Chile, Argentina and even New Zealand."
She said while packaged wines generally offered higher returns, local producers had been forced to accept that to compete globally, they had to provide what the mainstream markets wanted.
"Obviously we would prefer the accent to be on packaged wines, from a reputational perspective for Brand South Africa, in terms of job retention in the packaging industry and also to maintain sustainable profit margins for producers. We are therefore greatly encouraged by the recent growth of packaged exports to North America, Japan, China, as well as several increasingly affluent African nations, all to regions where we have been increasing our marketing investment."
Praise from high-profile critics
She said the industry had also been buoyed by the growing confidence in South Africa as a top wine-producing country among high-profile international critics, whose opinion carried great weight in the global wine business fraternity as well as with consumers.
"Over the past few weeks we have had praise from the likes of Neal Martin, who reviews for Robert E Parker's world-famous The Wine Advocate, and who has singled out South Africa as currently the most exciting New World wine country, as well as from Stephen Tanzer of the International Wine Cellar, the UK's Oz Clarke, Tim Atkin MW and Sarah Ahmed and Germany's Eckhard Supp."
Labour unrest in Western Cape
Birch said that while the industry regretted the current labour unrest in the Western Cape, huge strides were being made to ensure decent working conditions on all wine-producing farms.
"The local Fairtrade office has confirmed that South Africa now has the highest number of Fairtrade-accredited wineries worldwide, with 65% of Fairtrade wines sold globally coming from our country."
At the same time, Birch said, there was steadily growing support for the Wine and Agricultural Industry Ethical Trade Association (Wieta), with increasing numbers of producers subscribing to its code of good conduct. This was particularly after the international market reacted positively to last year's launch of the Wieta ethical seal, a world-first that provides a guarantee of fair labour practices.
"Wieta accreditation for rigorously audited fair labour conditions has accelerated since last year and with the increase in producer and worker training sessions scheduled, prior to auditing sessions, we expect many more labels to qualify during this year," Birch said.
Some of the South Africa's biggest producers have already earned Wieta accreditation for their labels, including Distell, Spier, Fairview and Robertson Winery.