Two virtually unheralded disclosures from the wine industry in the past few weeks hinted at changes that will have a significant effect on the beverage of choice of Cape wine drinkers, both at home and abroad.
The first was the announcement by Wines of SA, the organisation charged with supporting the country’s wine exports, that the 2022 export figures followed the same downward trajectory that had largely been their fate since well before Covid-19.
The second was the industry’s annual lekgotla hosted by Vinpro (the body representing growers’ interests) at which, among other things, future planting projections were discussed. Unsurprisingly, these are also continuing on a downward trajectory with area under vines shrinking at an average rate of several hectares per day. Alongside this, an average of two growers leave the industry every week.
Declining wine exports should not be regarded in the same light as reduced foreign sales of, say, deciduous fruit. The idea that less wine abroad means there would be more wine at better prices for local drinkers is as thoughtless and callous as it is plainly incorrect. The domestic wine industry is utterly dependent on exports to balance its books. If the country’s grape growers were to lose the R2.3bn they earn from disposing of their surplus in bulk wine sales abroad, the attrition already wreaking havoc on their numbers would reach pandemic proportions.
At a guess, slightly less than half of this export revenue makes its way back to the farmer: the sales yielding this much-needed cash flow comprise unbranded bulk wine averaging about R10/l. Bulk exports represent more than 60% of all wine exports by volume and about 25% of all wine produced.
The country’s 2,500 growers’ share is about R1bn of the bulk wine export revenue. This means that, on average, each grower earns R400,000 from this “surplus disposal”. It may not be profitable business in its own right, but it’s an income supplement few can do without.
Then there’s the small matter of the shrinking national vineyard, which is down 10% in a decade, which was 10% down from its peak just after the millennium. At the Vinpro lekgotla, a further 10% loss was predicted. If this proves correct we will have seen 30,000ha of vineyard grubbed up in 30 years. Some of this attrition has been compensated for by high-yielding plantings in warm irrigation areas. However, what’s gained by opting for this solution (more fruit from fewer vines) is lost in quality. There’s a reason that irrigation is generally prohibited in prestigious appellations in Europe.
If you’re a dedicated domestic market consumer of Cape wine you might think that this has little to do with the R100 to R300 bottle that meets your everyday or special occasion drinking. You would be wrong. First, revenue from surplus removal serves as something of a subsidy for what is sold locally. The growers who will lose the export income they have come to rely on will have to raise their local prices. They will find that market forces work in their favour: fewer vineyards will mean less fruit, so shortage will play a role in determining floor prices. Everything will cost more — by a percentage vastly greater than the consumer price index.
Second, this will have an enormous effect on the fine wine market: the lost vineyards will be in the higher-quality, low-yielding areas. Depressed average fruit prices make the greatest impact on growers in Stellenbosch, Durbanville and Paarl. They can never compete with the farmers in the baking, hot irrigation areas in the interior of the country.
So we will lose our best vineyard land to residential development. In return we’ll be offered nondescript juice from the industrially farmed land far to the north of the winelands we are all familiar with. This is what happens when the state extracts significantly more from the wine industry than the producers earn, and gives back virtually nothing in return.
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