Martin Fuller from the Cape

News from the Cape Winelands
© by Martin Fuller
Challenges facing the Cape wine industry
The world embraced South Africa's new democracy in 1994, sanctions became a forgotten medicine and South African wines were the flavour of the month. Having emerged from the confines of a siege economy, it was just all so easy to market Cape wines to all the happy and smiling buyers.

Times are a-changing and swiftly at that. No longer able to sell volumes of wine on goodwill and a handshake, the South African wine industry is faced with the daunting task of protecting its 3 percent stack in the international market.

To protect is to become competitive and able to affect change swiftly when necessary. On both fronts Cape wines are living in dangerous times. The international market is and has been changing for years. Trends are showing a marked swing from white wine consumption to red, especially in Europe South Africa's biggest export market (about 57 percent of exports) and on the red wine front the consumer is demanding wines with ripe fruit and soft tannins. As this reality hits home it becomes ever more harsh when considering that:

• of the 900 million litres produced, only 25 percent is red wine

• only 20 percent of the wines produced come from the big five cultivars - Cabernet Sauvignon, Merlot, Shiraz, Chardonnay and Sauvignon Blanc.

• 80 percent of wines produced are bulk and brandy sorts; almost an exact reverse of what is being achieved by South Africa's main International competitors, Australia, California and other New World producers like Chile.

• 60 percent of all the white wine produced is Chenin Blanc and this cultivars popularity stakes are fast declining; no more the big Brandy market either which used to sustain sales of this cultivar; the brandy market fell a staggering 11.6 percent during 1999.

Swift change has become vital to address these imbalances. And change there has been, the current harvest is witness to a 8.5 percent increase of red wine producing cultivars; but no decrease in white wine producing cultivars which must surely be a concern given that there was a 100 000 litre over production in white wines in 1999. Yes, new and exciting cultivar wines are coming on stream like viognier and mourvedre but this process of changing cultivar is a long and slow one and the Capes competitors have certainly set the pace; look no further than California.

Changing market demands are also effecting many cellars as wine makers strive to understand and implement new techniques that are required to produce the soft reds of elegant balance that consumers now want. And still the Cape is yet to produce consistently good white wines that will age and improve nicely in the bottle. From the 82 odd Estate wine farms and the 70 Co-operatives more and more are launching wines of distinction of a quality that are bringing home important awards, medals and favour. But there is a long way to go before being able to match the medal grabbing successes of the Californian, Australian and Chilean brigades.

All is not doom and gloom. The process of change, correct change, is very definitely underway and new strategies, namely the Wintech Vision 2020 are in place (albeit in their infancy) and will be mapping out changes necessary to make the country able to deal with the changing demands of the international market and be a strong competitor in the future. The international market will grow by an estimated $65bn sales today to only $69bn by 2025 an indication of how cut-throat the market will become.

With these realisations, tools and a workable action plan, Cape wines will not only protect their 3 percent share of the world market but should capture a significantly bigger share. But there is no doubting that oodles of hard graft, self belief and clever innovation are a prerequisite.

March 12, 2000