South Africa Promotes Expensive Wines to Boost Exports

Updated on
  • Wine makers have 1-2 percent market share in U.S., Asia
  • Producers see wine exports on par with last year's sales

Workers harvest grapes by hand at a vineyard in South Africa.

Photographer: Peter Titmuss/Universal Images Group via Getty Images

South African wine makers are promoting higher-priced bottles to boost sales in established European markets and make inroads in the U.S. and Asia where they hardly have a presence, the head of a local industry organization said.

Wine exports declined to 422.7 million liters (112 million U.S. gallons) last year from 525.6 million liters in 2013, according to the Wines of South Africa trade body.

Sales abroad in 2015 may be on par with last year’s or rise just above that, with packaged-wine exports expected to increase as much as 5 percent even as bulk shipments fall by about the same amount, Wines of South Africa Chief Executive Officer Siobhan Thompson said in an interview in Cape Town on Tuesday.

South Africa is the world’s seventh-biggest producer of wine by volume, representing 4 percent of global output last year. The country grows white wine grapes, including chenin blanc, chardonnay and sauvignon blanc, and its red varieties include pinotage, which was created in South Africa. The country’s almost 100,000 hectares (247,100 acres) of vineyards are mostly concentrated in the Western Cape and the industry employs 300,000 people.

Premium Wines

While weakness in the rand is helping exporters, businesses in Africa’s most industrialized economy are facing power shortages and higher labor costs. The currency has declined 14 percent against the dollar this year, while the state power utility has at times imposed controlled blackouts because of inadequate generating capacity.

The country wants to improve marketing of premium-quality wines in some of its top export markets, including the U.K. and Germany, progressing from the mid-range price band to help boost profit margins, said Thompson. Producers see a strong potential for export growth in the U.S. and Asia, from a low base currently at 1 percent to 2 percent share of those wine markets, respectively, and to other African countries, she said.

“The idea is to get into the higher price bracket, better profitability to put back into our vineyards and give back to our people,” Thompson said. “It’s really all about how we promote our wines and what we say about our wines.”