Wine Exports Stumble Amid Covid-19

7 October 2020 – Covid-19 has taken its toll on wine exports to the US – a market that was already showing signs of fatigue.

According to Maryna Calow, communications manager for Wines of South Africa, pre-Covid South African wines to North America had plateaued, although awareness of the product was growing. “The saturated market, however, left little room for growth,” she said.

With this in mind producers have been positioning South African wine as more “Old World” in style which means it has been the major non-European beneficiary of the tariffs placed on many European wines starting in October  last year. “In the first quarter of 2020, before South Africa imposed a ban on alcohol exports, beverage journal Gomberg-Fredriksen showed that South African exports were up 22% over the previous year. That did stumble in the second quarter, especially in June when imports of South African wine were down 75%,” said Calow. “It bounced back in July, and was up 6% at the end of that month. Portugal and New Zealand were the only other major importers to see growth for that period, and the latter was slowing on previous growth.”

Calow said in volume terms, the lack of truly large, focused South African brands in the US market remained a challenge. “The larger importers, distributors, and chains expect producers to come with serious volumes and a serious marketing budget, and few South African companies can provide that, especially with the current exchange rate. This means we’re building our presence through a piecemeal approach, without a true leading brand that can cut through the clutter the way Catena did for Argentina, for example.”

She said exports to South America remained low. “A number of our producers are exporting to this market, but it’s not one of our main focus markets as it is mainly serviced by wine from their own producers in Argentina and Chile. There is however a growing demand for our wine in Brazil, with export volumes just shy of 600 000 litres in the past 12 months.”

According to Calow, between September 2018 and August 2019, 1 095 234 litres of wine was exported to South America, but this dropped to 646 024 litres during the same period in 2019/2020.

Calow said producers were concentrating on the North American market.

“In the past ten years many boutique South African producers have caught the attention of the US sommelier community and there has been a lot of excitement about those sorts of wines,” she said. “Retail, however, has been slower to catch on but many wines are competing well in the fastest-growing $15-20 price range. In terms of competition we need to keep an eye on Australia, which is revamping its image away from the big companies and toward more boutique markets.” Source(Freight News)