Taking a wider lens, the macroeconomic outlook for the local wine industry hints at slightly brighter days ahead, according to leading distributor Vinimark’s latest Market Review, which was released in the final quarter of 2024. Despite ongoing local and global economic challenges, South African wine producers are demonstrating their resilience by focusing on premium offerings and embracing innovative packaging solutions that open up new avenues for success.
Oelof Wiedeman, Head of Insights & Business Advisory at Vinimark, notes: ‘Producer pricing has hit its lowest point in two years, and the Consumer Confidence Index has climbed to -5, its highest level since pre-COVID days. While a significant boost in consumer spending remains elusive, these trends spark hope for a potential surge in sales as we step into early 2025.’
A closer look at market research company Circana’s data reveals a notable shift: consumers are feeling more optimistic about their personal finances than they have in quite some time. Despite only a modest 2,2% growth in the FMCG category, this suggests a disconnect between buyer perception and actual spending power. Even so, this positive outlook holds promise for wine purchasing trends, particularly in the premium segment.
With approximately R4,6 billion in sales, the 750ml glass category remains the largest in the market, despite experiencing only marginal growth in recent months. Meanwhile, the five-litre Bag-in-Box continues to dominate volume sales, driven by the growing interest in sustainable packaging. Far from cannibalising glass bottle sales, Bag-in-Box has contributed an impressive 40 million litres to overall sales. Whether these consumers will eventually trade up to more premium categories remains uncertain, but the industry can take pride in successfully attracting a new wave of wine drinkers.
Premium wines are enjoying their moment in the spotlight, having surpassed those priced below R80. While this marks an exciting win for brands pursuing premiumisation strategies, it’s a timely reminder that lower-priced wines remain the lifeblood of the industry: a critical foundation that cannot afford to be overlooked.
The spotlight has shifted away from Red Blends, a category that showed promise in mid-2024 but has since plateaued. Chenin Blanc and Chardonnay have shown only slight gains, edging up by 0,2% and 0,8%, respectively. However, Wiedemann is clear that this is only a miniscule uptick, and does not signal a major opportunity, translating to only 750 brands showing growth.
Of the overall total of 6 804 wine products available, a mere 361 account for 80% of sales, and just four South African wine brands dominate this critical share. This concentrated landscape raises an essential question for producers: in a market this crowded, what meaningful value does launching a new product truly offer?
While the numbers paint an optimistic picture, it’s important to scrutinise them with a discerning eye, and question whether the growth is genuinely organic or merely a byproduct of item extensions and promotions. That said, the top wine brands are striking the perfect balance, driving both category and organic growth, setting themselves up for continued triumph. It’s thrilling to think about the possibilities that lie ahead for our producers, as they continue to shape the future of the industry.
Find out more about Vinimark by visiting www.vinimark.co.za