Western Cape Business News

Send  Share  RSS  Twitter  13 Oct 2010

BEVERAGES: How We Drink Our Wine


Recent Western Cape Business News

THE wine industry is generally acknowledged for the significant contribution it makes towards the Western Cape economy, especially when the linkage to the rest of the value chain is taken into account. But the primary side of the chain is more susceptible to adverse economic conditions and some of these businesses are experiencing a price squeeze.

This is one of the findings in PriceWaterhouse-Coopers’ Wine Industry Insights Survey 2010.

During the past decade there was a significant swing towards red wine production in the South African wine industry, increasing from 19% in 2003 to 33% in 2009. The fastest growing red cultivars were Cabernet Sauvignon and Shiraz for which production doubled since 2003, the survey found.

Since 2007 the red wine production seems to have stabilised at a third of total production. White wines gained momentum due to increasing white wine prices and red wine prices being under pressure due to a surplus inventory situation. Sauvignon Blanc showed the fastest growth amongst white varieties, most notably since 2007 and more than doubling since 2003.

The national 2009 harvest is down from the record 2008 level, with the comparative participating producer cellars also showing a 3% decrease in total tons pressed. Market results currently indicate a further decrease in 2010 of more than 8% of the total harvest as a result of various adverse weather conditions affecting the 2010 crop.

Major cultivars have not changed much since 2003 with Cabernet Sauvignon, Chenin Blanc and Colombar remaining the top three most planted cultivars. Other cultivars like Shiraz, Chardonnay and Sauvignon Blanc have increased significantly in popularity since 2003 and make up the following three.

Non-producing hectares showed a steady decline since 2005 with specifically red varieties not in production decreasing by more than 60%. One of the reasons could be the price squeeze leading to plantings being put on hold and producers not replacing vineyards as often as previously. It also indicates the reactive nature of the industry, reacting to the surplus of red wine and resulting in a decrease in the red wine prices at that stage. This is in line with the trends globally where most commentators and statistics indicate a stabilisation in plantings, according to PWC’s survey.

Going forward it seems that producers are again focusing on higher yielding white cultivars like Chenin Blanc and Colombar in order to increase profitability. Producers should however also keep in mind the age of their current vineyards in the light of the apparent adjusted replacement schedule.

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