Audrey D’Angelo
The growth of the black middle class in this country and throughout Africa is bringing better times for local wine producers through increased sales in both home and export markets, according to Su Birch, the chief executive of export promotions agency Wines of South Africa.
Although wine producers have suffered from the stagnant economic conditions in the EU and been hit by rising costs, Birch said she was “cautiously optimistic” about the future.
She was commenting on a report by Frans Weilbach, a director of PwC and its specialist partner on the wine industry, that says “most wine executives are positive about the growth potential of the industry over the next two to three years”.
The industry has been hard hit by rising costs, including higher excise duties, and the effects of recessionary conditions. Sales in the UK and continental Europe have fallen and some UK importers have saved money by switching to bulk wines, which they bottle in their own country.
Weilbach’s report says a significant percentage of chief executives are confident about the prospects for revenue growth over the next few years.
“The vast majority of executives, however, expect the global and local wine market to remain unchanged over the next 12 months, while 16 percent have indicated that there may already be some improvement during this period.
“Executives identified the development of both new and existing markets as opportunities to grow their businesses over the next 12 months.
“It may come as little surprise that increasing energy costs are of concern to the local wine industry, followed by the price of chemicals and packaging costs,” the report continues.
Regulations and taxes remain an important concern and “volatile exchange rates have a major effect on the successful development of foreign markets by wine businesses”.
Red wine recorded a growth in price per litre and the expectation in the next two to three years is encouraging, with a large proportion of respondents foreseeing further increases in average prices.
The same, however, cannot be said for white wine, where two thirds of executives are expecting prices to remain flat.
Birch said the report “is pretty much in line with our analysis of world trends. The world is moving away from an oversupply of wine to a much better balance. There has been nice growth in exports to other parts of Africa and to China and Russia, but from a small base.”
She added: “Consumers in the EU are very nervous. But sales of our fine wines, which offer fantastic value, are doing very well.”