SA wine industry shows resilience, eyes brighter 2025

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Oelof Wiedeman, head of insights and 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 enter early 2025."

Consumer optimism sparks potential

A closer look at market research company Circana's data reveals a notable shift: consumers feel more optimistic about their 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 bn 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.

Bag-in-Box packaging has added 40 million litres to overall wine sales without negatively affecting glass bottle sales. While it remains uncertain whether these consumers will move to more premium categories, the industry can take pride in attracting a new wave of wine drinkers.

Premium wines lead growth

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 minuscule uptick, and does not signal a major opportunity, translating to only 750 brands showing growth.

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Of the 6,804 wine products on the market, just 361 account for 80% of sales, with only four South African wine brands dominating this share. This concentrated market raises questions for producers about the value of launching new products in such a crowded landscape.

While the data suggests growth, it’s important to assess whether this growth is truly organic or a result of item extensions and promotions.

Nevertheless, leading wine brands are finding the right balance, driving both category and organic growth, and positioning themselves for continued success in the industry.