For the most part of the first decade of the second millennium, the wine industry in South Africa experienced a significant swing towards red wine production – moving from 18% of planting in 1996 to 44% in 2008. This gave rise to a surplus production position putting downward pressure on producers’ prices, SAWIS reports.
Given that the local demand for wine, red wine in particular, did not match the increased supply, the local industry was forced to enter the export market in a much more aggressive way than ever before.
No wonder then that export, as percentage of local production increased from 21% in 1999 to 54% in 2008. Despite fluctuations in the Rand exchange rates over this period, the general trend was downwards, helping to maintain export profitability.
The inflationary conditions coupled with pressure on disposable income have resulted in consumers trading down.
These obviously became much more price conscious. The South African wine consumer in general is regarded as more price conscious and less likely to venture into the higher priced products. In 2008 the demand for white wine has weakened whilst red wine sales showed a moderate increase.
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