South African wine consumers will be seeing an increase on sticker prices over the next few months, with an overall increase on local wines by as much as 20% per bottle before the end of the year. Elizabeth Mamacos spoke with some wine industry experts to try to understand the situation better.
Judy Brower, Director of wine.co.za, reports that the local online wine business purchases wines directly from distributors and wineries and has seen an increase in prices for 1 March 2018 that varies from about 8% up to 15%.
“Due to the drought in the Western Cape, wine production is down – in some areas 10% down in volume and in others as much as 50% down” she shared.
It’s not just the drought that will increase costs.
“The 2018 wine grape crop is expected to be the smallest since 2005, due to a decline in vineyard area, an ongoing drought and crop losses due to frost and hail,” reports Francois Viljoen, manager of Vinpro’s viticultural consultation service. In addition, production costs have doubled in the last ten years and the minimum wage for farm workers is set to increase by 17% in May.
“The wines being sold now are not wines produced this year – so we are likely to see prices increase again next year by at least the same amount, but I predict it is likely to be a higher percentage next year and the year after, when the red wines reach the market” Brower says.
“The cost of production is also increasing and for the wine industry to be fully financially sustainable, it will need to keep increasing its prices. Experts say that prices have to increase by 30% for the industry to be sustainable” she added.
This means that your average decent Chardonnay which now retails at about R80 a bottle will cost closer to R105 soon. Your favourite red, now around R90, will shortly set you back over R115 a bottle.
Don Tooth, Managing Director of Vergelegen Wines, shared his opinion with us, explaining that while producers are likely to be under cost pressures, “the vast majority will endeavour to stay within inflationary level price increases”.
Don adds; “the only areas likely to see higher increases (in the local market) will be from the smaller, high end, quality producers who will have experienced both a significant increase in the cost of their grapes together with lower quantities, leaving them with a difficult marketing and positioning scenario to offset against “balancing the books.”
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