South African wine trends 2016

The South African wine industry is currently enjoying one of its most exciting phases in history. Overall wine quality has increased dramatically over the last five years and the consumer is now spoilt for choice with a wealth of new producers, varieties and styles.

Though winery input costs have risen, the battered rand has pushed many struggling wineries into a profitable position. South African wine now offers tremendous value in the export markets and additional profits have allowed for more investment and even greater quality to come.

Here are my predictions for 2016.

 1. Fine South African wine will get more expensive

Expect double-digit increases and decreased supply. While the weak rand has positively affected producers, the knock-on effect will be less kind to the consumer. The demand for fine South African wine abroad is at an all-time high and the pull from export markets will be difficult to ignore. Developed markets can easily soak up our fine wine production at higher rand prices. The smaller, more fickle and undeveloped South African market will likely be left with less allocation. This leaves producers with little choice but to push up local prices in order to reach better parity with export markets.

Sadie Family’s Columella is arguably South Africa’s best red wine and sells for more than double in the US than it does in South Africa. This is an unsustainable position with ever-increasing globalisation.

A breakdown of our trade agreements with the US and EU will complicate the issue, likely decreasing exports and increasing foreign prices further.

2. Increased quality and higher prices will segment the market

The gap between luxury wines versus alcoholic beverage will widen. South Africa’s most expensive current releases are about 100 times more expensive than the least expensive (R2 500 verses R25). The figure in France is closer to 10 000 times, this leaves a large gap for South Africa at the luxury wine level.

Luxury wines are largely unaffected by the weak economy and require a different marketing and business strategy when compared to supermarket wines. Supermarket wine prices will likely stay more constant as producers find more efficient ways of production and consumers are squeezed by high inflation.

3. 2015: Possibly our greatest vintage comes to market

El Niño and climate change are causing large vintage variation in the Cape and across the globe, already resulting in two of the earliest harvests (2015 and likely 2016) on record. The “every year is a good year” notion is no longer valid and fine wine consumers are better online casino appreciating and understanding vintage variation. Both 2009 and 2012 were excellent recent vintages, but many producers believe 2015 could be superior. 2015 enjoyed favourably dry conditions and grapes were harvested with remarkable health and excellent acidity. Early tank and barrel samples suggest a richly textured, pure and lively vintage with lower alcohols. As the 2015″s reach the market, will it prove to be our finest vintage yet?

 

4. New varieties will start to find favour

Our industry was modelled on traditional French and German grape varieties that may not be best suited to our soil and climate. More adventurous winemakers with increased international exposure are exploring a host of interesting varieties that offer different styling and flavours.

The big four varieties of Syrah, Cabernet Sauvignon, Chenin Blanc and Chardonnay will, however, continue to produce the wealth of South Africa’s finest wine for at least the short or medium term.

5. Water will become more important, especially in dryland areas

The national drought has yet to have a dramatic effect on the wine industry. But with some parts of the Cape having received half their annual rainfall in 2015/2016, vineyards without irrigation will have dramatically decreased yields in 2016. The management of water will be increasingly important, requiring a focus on the vineyard rather than the cellar for quality and quantity. Wine growers receiving consistently poor yields and low prices may be forced to rip up vineyards and consider other farming options.

6. E-commerce boom

Wine is a bulky product so why not let somebody else deliver it? As consumers find more confidence in buying online and as logistics and service levels improve, more fine wine will be sold online. Delivery costs generally inhibit supermarket wine sales, but there are a wealth of new wine websites that offer an interesting mix of new wines, as well as free delivery. Find an online merchant that understands your taste and budget; click, drink and enjoy!

Article adapted: Money Web