Wine
Key trends shaping the wine industry in South Africa
The wine sector sector expects reasonable harvest this year , amid concerns about the productivity of wine farms due to economic challenges and unpredictable weather patterns .
Dawie Maree , head of information and marketing at FNB Business Agriculture , says overall production for the year has not been impacted to an extent that we cannot meet demand . Wine farmers are still going strong and have demonstrated resilience against an influx of challenges facing the industry .
“ Over the past few years , we have significantly grown output and claimed a position amongst some of the biggest wine exporters in the world . During this period , wine farmers have endured many tests , while adapting to rapidly changing global and local economic conditions ,” adds Maree as he unpacks key trends and opportunities currently shaping the wine industry in South Africa . major currencies has been positive for wine producers that are active in the export market . Foreign markets are able to spend more on our wines which makes us more competitive .
High production costs – rising input costs such as electricity , fuel , packaging and transport continue to affect the profitability of wine producers . Maree says producers are constantly battling to drive down costs by being more efficient and innovative .
Skilled labour – with farmers constantly upgrading machinery , techniques and technology in order to compete globally , the need for a more skilled and flexible labour force has become essential .
Some trends
Climate change – unpredictable weather patterns like the drought are having an adverse impact on the productivity of vineyards .
“ On a positive note , dams are currently at fair levels and recent weather forecasts have indicated that the El Nino pattern is weakening , increasing the chances of La Nina ( cooler weather with rainfall ) later in the year ,” says Maree .
It is becoming essential for wine farmers to therefore factor in climate change when devising their long term strategies .
Exchange rate volatility – the weakness of the Rand against
Easy access to global markets – as the demand for South African wines continues to increase , free trade agreements are playing an important role in limiting barriers and facilitating access to global markets . For example , the recent agreement between the Southern African Customs Union ( SACU ) and the EU which will enable the country to export an estimated 110-million litres of wine to Europe is positive for the future of the industry .
“ Regardless of the current and potential challenges facing wine farmers , the industry still has a lot of room for growth and continues to play an important role as a contributor to the Gross Domestic Product ( GDP ) and job creation ,” concludes Maree .
AUGUST / SEPTEMBER 2016 41