Why buyers need to act now to get any volumes from South Africa’s worst harvest in 15 years
By Richard Siddle
If South African wine producers are up on their Dickens they could well be turning to the copies of a Tale of Two Cities to describe this year’s harvest. For with the smallest crop in 14 years it’s not quite the “worst of times” but not far from it. But on the other hand the reports across the country are that the difficult climatic conditions that have brought the volumes of grapes down have also combined to help create one of the “best of times” vintages.
The overall story, though, is that this poor harvest will have an even bigger impact on the overall South African wine industry as it is not in isolation, but comes hot on the heels of the low harvest in 2018. This week SAWIS (South African Wine Industry Information & Systems) announced the overall grape crop is estimated to be 1,225,620 tonnes, based on figures up to April 26. If correct the harvest is only actually 1.4% smaller than 12 months ago, which takes it below the 2005 figure of 1,171,632 tonnes.
The good news for both producers and buyer is that what wine can be made from the 2019 vintage is expected to be very good thanks to the fact there have been so many smaller berries picked, that bring with them a “greater concentration of flavours, with good acidity, sugar and elegance,” according to SAWIS.
This year it has not been the lack of rainfall that has been the main problem. Most areas received good quantities of water. It is more the cumulative factor of vineyards that are still recovering from what has been effectively three years of drought in the country. There simply has not been enough time for the soils and the vines to recover from the batterings they have taken. The fact they are still able to produce such quality fruit should be seen as a blessing.
Act now
The knock-on effect on grape prices will have to be seen, but with such small, if non existent reserves to carry over from the 2017 and 2018 harvests it means buyers will once again need to react quickly if they are going to be able to reserve anything near the quantities of wine they might want. Forecasts are certainly going to have to be revised.
VINEXs South African regional manager, Emile Gentis, revealed his concerns in his most recent regional report in March when he said: “If I was an international buyer, my alarm bells would be going off like Big Ben. South Africa has had the lowest carry over stock in 20 years and I am sure we will see some wines being imported agin, if domestic demand lasts.”
As for pricing, he added: “Last year we saw a massive spike of price increases. Up to 20-30%. This year, I don’t expect to see similar increases, but you might pay a 5-7% preferential rate on top of last year’s increases. I think most prices would have settled on last year’s pricing.
“The key thing to note is that prices are definitely not coming down as some of the international buyers are hoping. It is simple why would a winery do all the work and pay the FOB part, if they can sell it domestically.”
International buyers, though, are becoming used to dealing with difficult trading conditions in South Africa. Paul Meihuien, South African buyer for UK distributor, Bibendum, for example, described the 2018 vintage as “the most challenging harvest” he has ever known in the country. The fall in 2019 might not be as dramatic as the 15% it was last year, but those “challenging” times are back.
Francois Viljoen, viticultural consultation service manager at Vinpro, which has also produced its harvest report this week, prefers to use the term “trying” to describe what the country’s grape producers and wineries have had to go through.
What is more worrying for the South African wine industry as a whole is that part of the reason for this year’s shortfall is also down to the fact there a lot less vines to produce grapes full stop. As Viljoen says: “A decline in area under vines and challenging weather conditions contributed to the smaller harvest.”
Ageing vineyards and thinner profitability margins for producers have contributed to a decline in the area planted with wine grapes of around 6% over the last five years, says Vinpro.
They also started the vintage on the back foot because of the years of drought. Producers, says Viljoen were not able to “apply crucial post-harvest irrigation” which meant the vines simply did not have the “reserves needed to carry them through the season - which in turn affected the berry set and growth,” he says.
The reason for the smaller berries this time round was due to the bad luck of poor weather during the crucial bud break and flowering season, followed by cool windy conditions which meant the vines were not able to produce as many bunches. Up to the end of February conditions had actually been very positive.
Ups and downs
With such vagaries in the weather it means there are some quite big differences when you break the harvest down by region. It was relatively good news for the Northern Cape, Swartland, Paarl and Worcester regions as they were able to produce larger crops than last year, albeit from a lower base.
It was a different picture at Breedekloof and the Cape South Coast region which saw crops smaller than in 2018 but not too far off average returns. Robertson and Stellenbosch were also down, but the bigger losses occurred in the Olifants River and Klein Karoo regions, which was to be expected as they were also the hardest hit by drought in the previous years.
Looking ahead
The buyers who are best placed to work with South Africa’s small harvest are those who are close to the market and their producers and suppliers. It has been noticeable how much forward planning and listings that have been since on VINEX in 2019 compared to previous years. Buyers looking to act and make the most of what they can. The situation will, no doubt, get worse before it gets better now that the news of the expected poor harvest is official and the subsequent rush on volumes.
Relationships are going to be tested in the coming months, but the suppliers and producers who are able and willing to be as flexible as possible with their buyers will be the ones that come out top in the end.
* Click here to read Vinpro’s full regional report.