South Africa stalls across UK hospitality sector

South African still wine is falling out of favour in the UK on-trade, according to data released by market analyst CGA Strategy.

In the 12 months to 23 March 2019, sales of South African Sauvignon Blanc (volume 9lr cases), decreased by 17.3% in the UK hospitality sector, while in the same period value sales decreased by over 16%. Total sales of South African wine in the on-trade decreased by 12.8% in volume and 8.7% in value respectively.

“The decline is being driven by the performance of the country’s key varietals: Chenin Blanc, Pinotage and Sauvignon Blanc,” said Gareth Parry, Client Services, CGA Strategy.

But according to figures released by Wines of South Africa, the total value of exports to Great Britain rose in 2018. In addition, IWSR data shows a compound annual growth rate of 2.1% for exports to the UK between 2014-2018. Great Britain remains the largest export market in the world for South African wine.

“While value is also declining, this is happening at a slower rate which suggests a level of premiumisation within the market. It is also notable that Pinotage appears to be performing reasonably well contextually against South Africa generally and other key varietals,” said Parry.

During a tasting at the London Wine Fair in May, Paul Cluver’s cellar master Andries Burger said the industry needed to work harder to promote its supply of premium wines.

“I do think South Africa produces wines of outstanding quality that can be compared to some of the best wines in the world, but we struggle to crack the super to ultra-premium segment,” said Burger.

“When South Africa started to export in the early nineties, we had a lot of surplus wine – we were the flavour of the month, and so a lot of wineries were just happy to get rid of their stock,” he added.

“This helped to create the ‘cheap and cheerful ‘perception of South African wine. Unfortunately, we do not have the critical mass in the higher price segments.”

Speaking about the launch of a limited-production, single-vineyard Chenin Blanc – called The Divas – DeMorgenzon chief executive Carl van der Merwe called for higher prices across the industry. The Divas, sold mainly to private clients via UK agency Seckford, retails for over £90.

“We need to raise prices, and have the guts to stay there. If we maintain deep discounting and cutting our margins, we will never gain respect,” said van der Merwe.