The smaller wine grape harvest anticipated by industry body Vinpro for this year is expected to result in a R700-million shortfall at farm gate, at a time when production costs have doubled in the past decade and the minimum wage for farm workers is set to increase by 17% in May.
However, despite the increased financial pressures, Vinpro MD Rico Basson said the industry was now entering a new growth phase in the wine industry’s seven-year cycle.
For one, wine prices are expected to rise owing to a looming wine shortage, with stock levels the lowest in 15 years.
“Take advantage of this by negotiating higher price points. This year should be the new baseline year from which we should grow value going forward,” Basson said during his yearly state of the wine industry review at the Nedbank Vinpro Information Day last week.
In its thirteenth year, the information day measures the industry’s progress against 2025 targets of the Wine Industry Strategic Exercise (WISE).
Meanwhile, Basson noted that it was encouraging that local wine sales volume grew by 2.8% to 406-million litres in 2017, but even more positive that the value of wine sold had increased by 8.6% to R13.2-billion.
UK-based market research company Wine Intelligence CEO Lulie Halstead, meanwhile, encouraged winemakers to create a brand that people would remember.
“Brands need to have a recognisable, pronounceable and memorable name or icon. Universally, wine is synonymous with reward, treat, relaxation and celebration. Wine tourism and hospitality create the perfect opportunity for you to make your brand part of your consumer’s lasting memories,” she said.
For the industry to stay afloat it needs fewer individual brands, but more focused and stronger brands at every price point.
“I truly believe that we should make an industry-wide commitment to protecting against fragmentation. We should be fighting dilution and moving towards an era of greater specialisation,” said Warwick Wines MD Mike Ratcliffe.