Greg Sherwood MW: SA wine needs to stay positive despite difficult trading conditions

By , 21 February 2024

Solicitors’ Wine Society South African tasting, February 2024.

February and March are usually a spectacularly busy time in the European wine trade calendar, no more so than right now. While South African producers are toiling away bringing in their grape harvests and beginning their 2024 vinifications, the UK wine trade is reawakening in earnest after ‘dry January’ and desperately trying to breathe new life back into a flagging fine wine market. Never mind that UK importers expect producers to travel to the UK mid-harvest to pour and present their current releases at their multiple portfolio  tastings, but they also expect them to work the wider wine trade to help reinvigorate clientele after what has turned out to be two consecutive recessionary quarters in the UK economy. I know from the Cape winelands bush telegraph that talk of tough times and difficult market conditions is a subject preoccupying many local South African producers. In fact, it’s a wider topic preoccupying much of the UK wine trade in general at the moment.

But it is not just the UK wine industry that is sailing into economic headwinds. The French wine and spirits sector witnessed a notable decline in exports in 2023, with figures falling 5.9% to €16.2 billion amidst global economic challenges, prompting the President of Federation of Exporters of Wines & Spirits of France (FEVS) to call it “a wake-up call” for French wine and spirits companies. This decline, as revealed by FEVS, comes as high inflation and declining disposable income worldwide have notably impacted consumer spending habits, leading to reduced demand for luxury goods, including premium wines and spirits.

The US, a key market for French exports, experienced a sharp 22% decline to €3.6 billion, attributed largely to a correction in wholesaler inventory levels after the Covid-19 pandemic’s surge in purchases. However, the performance in the UK and Asia offered a more nuanced picture. In the UK, exports held relatively steady at €1.7 billion, actually up1% from the previous year and the sales of sparkling and still wines remained largely unchanged, though volumes did see a 5% decline. This is perhaps to be expected with pricing for even modest Bordeaux, Burgundy and Champagne reaching all-time high prices, forcing buyers to curtail purchases in terms of volume, if not value as well.

Highlighting the broader implications of these trends, it reminds all of us in the wine trade of the continued need to adapt to changing consumer and market demands. It also demonstrates how much the sustainability of the export success of South African wines requires the strong and long‐lasting support of public authorities as well as larger key brand owners, allowing new market segments to be developed and other more mature market segments to be prevented from declining further. But ultimately, the reach and impact of bodies like Wines of South Africa (WOSA) is going to be greatly restricted by ongoing budgetary restraints and a very unbeneficial GBP / ZAR exchange rate. As always, the marketing and brand building hard yards are going to fall on the shoulders of all the individual producers out in the Cape.

Of course, the wider wine trade market indicators out there paint a pretty precarious picture for many international producers. But I would also argue that within the UK and European context, South African wines are still riding an incredible wave of fine wine popularity that certainly does not look like diminishing any time soon. Volumes of entry-level bulk SA wine shipments might possibly see declines in the coming year, but scratch a little deeper behind the figures and you’ll see that quality bottled wine sales are buoyant and growing, and while cost pressures are affecting all producers, South Africa’s finest wines are still perceived as offering good value for money. So surely from all this, South African producers should avoid consciously or even subconsciously painting themselves into a false corner of desperation when the sentiment on the ground remains largely upbeat.

Large and small wine producers across the Cape winelands should be actively planning and budgeting their next rounds of visits and marketing exercises in the UK for the coming European spring. For while the general positive market sentiment towards South African wine endures, consumers are somewhat goldfish-like, needing to be constantly reminded just exactly why South Africa’s wines are some of the most exciting, diverse and collectable at the moment. Positivity needs to be the order of the day, for like most things in life, focusing too much on the negatives can act as a self-fulfilling prophecy if producers are not careful. Many producers, not least the Bordelais, have already convinced themselves and the market that the coming 2023 En-primeur campaign is going to be a flop due to moments of difficulty leading into the 2023 harvest. South African producers would do well to learn from their mistakes and focus on the positive narratives that will ultimately shape the hype around their new releases.

But perhaps I’ll to leave the last words to Justin Gibbs, the deputy chairman and exchange director of Liv-ex… “With Chinese demand sidelined and higher interest rates weighing on stock holding strategies, both at the merchant and collector level, risk aversion remains pervasive. This said, fine wine has always been a relatively steady ship in a storm and recent trade dynamics suggest some are beginning to sniff a real opportunity.”  For South African wines at least, the momentum, for now in my opinion, remains bullish.

  • Greg Sherwood was born in Pretoria, South Africa, and as the son of a career diplomat, spent his first 21 years traveling the globe with his parents. With a Business Management and Marketing degree from Webster University, St. Louis, Missouri, USA, Sherwood began his working career as a commodity trader. In 2000, he decided to make more of a long-held interest in wine taking a position at Handford Wines in South Kensington, London, working his way up to the position of Senior Wine Buyer. Earlier this year, he moved across to South African specialist merchant Museum Wines to become the Fine Wine Director. He qualified as a Master of Wine in 2007.


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