South Africa’s resilient wine industry learns to adapt and survive in tougher environment

South Africa’s wine industry is a national asset that stretches far beyond the picturesque Winelands, says Rico Basson, chief executive of South Africa Wine, an umbrella body for the sector.

The industry’s leaders know that its survival lies in reimagining every step of the value chain, from how wine is packaged, to where and how it is sold and consumed.

“It’s a sector that employs 270,000 people,” Basson says. “Wine goes back to farming from Agulhas in the south to Upington in the north.”

It’s an industry that’s staring down the reality of shrinking production, younger generations that are drinking less and beer still ruling South Africans’ booze budget.

Trends and innovation 

South Africa’s wine producers are throwing out the old playbook. Lighter bottles, lower-alcohol-content wines and even cans are becoming tools in the fight for relevance, affordability and sustainability.

“Alternative packaging like cans is becoming a huge trend,” Basson says. “It’s not about the volume; it’s about meeting consumer needs and accessing new channels.”

The planet is also part of the equation. A typical wine bottle weighs 450g when empty. Exporters are moving to 360g bottles, says Basson, cutting both costs and carbon.

South Africa can’t beat the French on climate, but Basson believes the country has a competitive edge in the ways it is able to adapt. “In France you can’t produce Cabernet and Pinotage side by side. In Stellenbosch you can.”

Behind every sip of wine lies one of the country’s most complex value chains. According to Basson, it maps no fewer than 127 career pathways. “We’ve got 86,000ha of vineyards, 2,000 growers and 80,000 workers just on the primary side,” he says.

“For every one job you create on a farm, the chain creates 10 others.”

Victor dos Reis, head of Investec Private Capital, reckons the sector has much to offer investors.

“We’ve got fantastic resources, fantastic people and fantastic technology. So to me it makes good sense for an investor to look here.” 

Dos Reis says there are several value-adding opportunities in processing and canning, and in the tech-driven solutions emerging from the Western Cape’s growing digital economy.

Infographic by Kara le Roux

Expansion and challenges

The subsector of wine tourism is also growing at an exponential rate. The biggest misconception is that all wine tourists are foreigners, says Basson, who notes that about 66% of them are South Africans.

The challenge is to spread the tourist wallet to more destinations and experiences. “We can’t take more people up Table Mountain, but we can take more people to Darling,” he says.

Dos Reis says the industry must keep innovating the wine tourism experience.

“Wine tourism has quite a few factors. There are countless opportunities. You’ve just got to be creative around it.”

The alcohol industry is also navigating a regulatory and operational environment that is becoming increasingly strict.

“Our biggest threat right now is [excessive] taxation,” Basson says. “We don’t have a problem with regulation; we have a problem with enforcement.”

According to National Treasury figures, 14% to 22% of all alcohol trade in South Africa is illicit, adding nothing to the country’s coffers. “If you’re Treasury and you can enforce [taxation], you can get back a lot of your excise,” Basson says.

At the same time, the industry is wrestling with sustainability expectations. There is much chatter about environmental, social and corporate governance issues, but Basson cautions against it being “window dressing”. The sector is working on formal baseline standards to set tangible goals and move to greener systems, he adds. DM

This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R35.