Wine exports will decline by 17% in 2023

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Jimmy Moyaha: Let's look at wine export. South Africa is a major wine exporter in the world, and South African wine is one of the most consumed wines in the world. I feel like last year wasn't the best year. To find out what's going on and how these developments are impacting the South African wine industry, Marina Kalou, Communications Manager at Wines of South Africa, helps me I did.

Good evening, Marina. Thank you very much for your time. Export volumes in 2023 will decrease by 17% – this is a significant decrease. What were the factors behind these declines?

Marina Kalou: Good evening, Jimmy. Yes, it's steep. Regarding this decline, there were actually many factors that played a role in a particular way.

We must start by looking at the global economy. That's one of the really important factors. And it's really reassuring to know that we're not the only wine-producing country reporting negative numbers. So it's a bigger picture that our competitors, Argentina, Australia, and even European countries are reporting numbers like this.

Consumption is decreasing. Consumers are choosing to pay a little more and drink a little less.

Whereas before they might have had two bottles of cheaper wine, they are now saving themselves for something a little more special and buying one bottle when they buy wine.

But, of course, there is a need to look at the situation at ports at a more local level, which inevitably affects exporters to varying degrees.

Of course, these issues [relate] Concerns about credibility as an industry. And the general geopolitical situation happening in this world is also causing a lot of uncertainty in this regard.

Jimmy Moyaha: Marina, you mentioned the situation at the port. What I wonder about is the role that Transnet and the inefficiencies we're seeing there have played in this area, but is that really something that's only emerged in the last year? Or is it just a problem that the industry has had to deal with for years that has only gotten worse in the last year?

Marina Kalou: I think it has come a long way. Even before COVID-19 hit us, we were beginning to notice major problems at our ports. So it's certainly something that's escalating, and it's also something that we've managed to deny as an industry for a while.

We have additional lead times when dealing with importers in export markets. And it is now at a certain unstable point, on the brink of instability.

We as an industry are overly involved with these entities at the Port of Cape Town and with Transnet, and we spend a lot of time trying to find workable ways around this problem. However, while saying this, we must not forget that this is not the only issue affecting our exports. That's a factor – let's put it that way.

Jimmy Moyaha: Marina, you said that we are not the only ones experiencing this situation in terms of producers and global wine exporters. Other countries, such as Argentina, are experiencing similar situations. How is our local market doing? For example, are you aware that tourists visiting Cape Town, as you mentioned earlier, are buying more wine to take home? Or have we noticed that local consumption is increasing to compensate for what we are not exporting?

Marina Kalou: Although we cannot say that local consumption is increasing, local consumption is certainly quite stable. For local consumers, it is important to note that our producers truly put the local market first.

We are definitely seeing a change in who consumes wine in South Africa. It's definitely a growing product, whereas previously beer and spirits were more consumed locally.

But you also mention tourism. I think this is a very important part of what we do here in the Cape Winelands.

Tourism brings in huge revenues for producers, and many small and medium-sized enterprises in particular rely heavily on wine tourism.

Anyone who has ever visited one of our international competitors' winelands will be convinced that South Africa's wine tourism offering is second to none.

So what we do with this is we create ambassadors. Rather than foreigners coming here and taking wine home with them, they inevitably return to their country of origin to find South African wine on the shelves. They experience the best that the Cape Winelands has to offer and tell their friends, family and colleagues about South African wine.

This is a real strength and I'd like you to keep an eye out for it as we release the latest figures from our Wine Tourism Survey on February 1st. These numbers highlight an incredibly strong recovery and how important wine tourism is to us. .

Jimmy Moyaha: On the positive side, Marina, although we did see a decline in volumes, this was partially offset by a weaker rand. Do you think this is a kind of offset that is sustainable or is it a serious concern that the volume levels are decreasing and I just want to see if we can get the volumes back up before it becomes a significant issue at the export level? Are you thinking that?

Marina Kalou: From a volume standpoint, I don't think it's much of a concern for us. At the moment, we have a very favorable inventory situation. In 2023, the harvest was also slightly lower, but this means that we are in a very comfortable situation in terms of stocks.

This plays into the supply and demand situation a lot and we are not overloaded with wine like some of our competitors, so we can actually charge a little more for our wine.

The Rand per liter or dollar per liter value of our wines is actually very important. The sustainability of our industry from a financial perspective is absolutely paramount to the longevity and long-term growth of our industry. That was a big concern for our industry. So despite the decrease in volume, this growth is really interesting for us.

Jimmy Moyaha: Well, I'm looking forward to reading that report on February 1st. If I remember correctly, I might be reading it from a wine farm.

I'll leave it at that, Marina. thanks so much. That's Marine Callow, Communications Manager at Wines of South Africa, who gives us an update on how wine exports will fall by 17% in 2023, but she remains optimistic about the industry as a whole. I did.