Tim James: World wine woes

The wine world is not generally cheerful at present ­– and I mean the whole big world, not just the South African corner of it. With wine consumption declining in most markets (domestic and export) while the global surplus rises despite 2023’s global production falling to a 60-year low (think: weird weather and climate change), one doesn’t need to look far to find gloomy analyses and prognostications for most countries.

Just the other day I saw a report on the head of an association representing some 500 growers in California calling for 30,000 vineyard acres to be uprooted there in order to balance the market.  That’s 12 000 hectares of vineyard, about as much as South Africa has lost in the past dozen years or so (to some people’s laments – not mine).

Amother example: Mid last year Robert Joseph wrote in Meininger’s International that “Australian wine is in crisis”, noting, amongst other things, falling volumes in many markets, value per litre sold falling faster still, with more wine shipped in bulk at lower prices. Familiar sort of stuff. Crisis is a word much in use in the global wine industry.

The latest ProWein Business Report, Ways out of the crisis, considered the results of a survey of “2,000 members of the wine industry, from producers to retailers, conducted by Geisenheim University”, as reported by Drinks Business. Major threats identified by the respondents included cost increases, global economic downturn, decreasing wine consumption, and climate change. (As an interesting aside, it seems that not only are people drinking less, they’re also not drinking better, so there’s no real comfort for South Africa’s smarter producers there – except, perhaps for the few who might be the beneficiaries of quite rich people drinking less burgundy and Napa cab.)

The ProWein report also noted that many potential wine-drinkers are turning to both beer and spirits, and in fact a crucial factors in the alcohol world’s woe is the consumer move to low- or non-alcoholic drinks. Health concerns are central here, with increasingly vehement arguments made against alcohol consumption. A year ago, the World Health Organization stated firmly, on the basis of research, that “when it comes to alcohol consumption, there is no safe amount that does not affect health”. Further, the form in which the alcohol comes is largely irrelevant. Governmental and other actions and arguments against alcohol conumption, including wine of course, are only set to further increase. (Of course, one of the particular problems in this regard for wine is that, unlike low/no-alc beer, dealcoholised wine is at present pretty widely considered – including by me – to be pretty undrinkable stuff.)

So, a world-wide crisis, in many estimations. It’s worth being properly aware of it when confronted by contextless, bleak and bald statements about the decline in the volume and value of South Africa’s 2023 wine exports, such as Winemag’s recent note on a recent Wines of South Africa’s press release. Winemag’s summary was that “South African wine exports declined by 17%, in 2023 resulting in total export volumes of 306.3 million litres. Value, meanwhile, dropped by 11% to  US$540 million.”

Interestingly, if you look at the value in rand terms, it actually rose, by nearly one percent – reflecting the downward spiral of the rand, but not an unreal consideration for those earning rands. Also, even in dollar terms, the 16.9% drop in volume versus the 11% drop in value does indicate something positive: a not-insignificant rise in the value per litre of wine exports.

(Unfortunately it’s probably necessary to mention that the Wosa press release, despite labouring mightily if not elegantly to put a positive spin on things, did not bring out this cheerier element. Instead, its opening paragraph incorrectly speaks of a “positive value growth of total exports to a respectable US$540 million (R10 billion), despite the volume decline”. It was an accompanying set of Sawis figures which showed the 11% decline given on Winemag, rather than that “positive value growth” in dollar terms. Michael Fridjhon has taken this up with Wosa, but no correction has been issued at time of writing this.)

Statistics I have seen (I’m not privy to Sawis’s continuing amassing of figures) do suggest that things improved for South African exports in the last quarter on 2023. Ciatti’s latest Global Market Report states that “SAWIS data showed a 27% decline in South Africa’s wine export volumes in the 12 months to September”. If this is so, and September’s 27% decline became December’s 16.9% decline, then that indicates a big late-year jump in exports – but whether of bulk or packaged wine, or of what varieties, I do not know.

And, of course, the big percentage volume decline (though at least shared by most other countries) remains a decline, and deeply worrying for producers. As I reported some months ago, one surprising advantage that the South African industry has at present is a new growth in the domestic market, helping to bring some balance into the equation. Will this industry-encouraging uptick in domestic consumption continue? Will the export situation improve (Cape Town harbour permitting)? We must wait for more international and local statistical releases to give us some more clues.

I think we can certainly expect more reports of local (and international) vine-pulling. Leaving vineyards to decay is an unmitigatedly depressing sign, but if there’s an alternative, something like citrus or wheat or almonds to make it worthwhile to replace unwanted vines, that’s surely excellent. To quote myself, we must hope that land and the labour force are better used elsewhere than in producing more grapes to feed the world’s wine-glut.

Focusing inwards, I wonder what the export decline means for the producers of the kind of local wine Winemag readers are mostly interested in. Many of the smaller new producers of the last decade have had quite an easy ride so far, thanks to buoyant exports for their kind of wine, supported by an encouraging international critical reception. Word is that declining exports mean that many of them have a lot of stock still on hand – and therefore reduced financial resources – as they enter harvest 2024. Unless the export scene changes fairly soon, they might well be forced to turn more attentively to their local customers, who might not be keen to continue paying the sort of escalated prices that have been becoming the norm for many of the international darlings. Something else to watch out for. But of course we must wish them well in the big wine world, where cruel winds are blowing.

• Tim James is one of South Africa’s leading wine commentators, contributing to various local and international wine publications. He is a taster (and associate editor) for Platter’s. His book Wines of South Africa – Tradition and Revolution appeared in 2013.