The South African wine industry is experiencing one of its most exciting phases in history.
Overall wine quality has increased dramatically over the last five years, international recognition is at an all-time high and the consumer is now spoilt for choice, with a wealth of new producers, varieties and styles.
Though winery input costs have risen and the continued drought may mean a significant drop in yield, the battered Rand has helped exports and aid profitability. The South African wine offers tremendous value locally and abroad, but premium South African wines are surging in price, widening the gap to everyday beverage wines.
So what are some of the trends emerging in 2018? We spoke to Roland Peens, Director of Wine Cellar – fine wine merchants – about his five top trends and predictions for the Nectar of the Gods…
Rosé could not be more trendy and the growth of the premium Rosé category continues around the world. It has however taken some time in South Africa as we have had to shake off the semi-sweet, poor quality, bright pink image. Rosé can be a by-product of red winemaking in order to make reds more concentrated. It can also be a blend of left-over red and white wines.
Sauvignon Blanc is back
Sauvignon Blanc has been hurdled by Chardonnay and Chenin Blanc as the leading white varieties over the last decade in South Africa. Usually offering a crisp acidity, tropical flavours as well as green pepper notes, South African Sauvignon Blanc can be rather watery however, offering less excitement than other varieties. But, older vines, lower yields and more authentic winemaking can make for serious, long ageing versions.
Drought will affect prices
Three years of drought in the Western Cape is going to severely impact yields in 2018 as water quotas are slashed and the vine struggle to keep up production. This will not only decrease volumes but also push up costs in years to come. Expect entry-level wines to become more expensive as stocks are diminished and the drought continues. Economically and politically this is a major concern as large volume wineries operate at marginal profitability levels.
Buy the great vintages En-Primeur
As entry-level wines will be affected by the drought, SA’s premium wines will also be affected, but in a different way. Lower yields and smaller berries make for more concentrated and perhaps better quality wines. Farming and production costs will, however, continue to push SA’s premium wines up faster than inflation. With relatively small volumes for South Africa’s top wines, especially gaining huge international following, demand will be bigger than supply. The model of ‘En-primeur’ or buying pre-release, will become more popular for the highly-demanded great vintages. Buying pre-release not only allows you to secure your purchase early but also speculate on the price if you think it may appreciate on release. As the quality of the fine 2017 vintage gets realised, expect there to be strong demand to buy 2017 ‘En-primeur’ already in 2018.
Online Retail Boom
South Africa is still behind in online retail with mature markets like the US or UK buying 5 times more of all goods online than SA. As the internet gets faster, transactions more secure and e-commerce more efficient, expect to buy more of your wine online. It is great to peruse the bottles on a shelf, but expect lower prices online, more information, no lugging of heavy wine boxes, shopping in your nighty and of course, no parking issues…