South Africa pushes premiumisation as value sales grow

The legacy of entry level wines from South Africa is shifting in the UK, as value sales of the nation’s exports continue to outstrip volume growth.

The ‘value for money’ legacy is one many South African producers are desperate to shake off. The UK remains one of the largest export markets for the country’s wine, meaning cracking the UK consumer is vital to the region’s survival.

Mike Ratcliffe is the chairman of Stellenbosch Wine Routes and founder of business consultation firm Wine Business Advisors. He believes that this quality shift has already taken off among producers.

“If you look around South Africa, everywhere you look it’s all about premiumisation,” he told the drinks business. Producers are constantly “gunning for a higher price”, in a bid to move away from this legacy of affordability, and for some at least, it seems to be working.

“The top end of the South African line has never been more buoyant and, dare I say it, profitable,” Ratcliffe said.

In the UK market, this upward trajectory is being reflected in value sales growth, which has continually outstripped volume growth over the past few years, continuing into 2022. Coupled with the increase in prices, this growth indicates that we’re seeing more exports of higher priced wines to the UK market. 

Export value to the UK increased by a fifth (20%) in 2021, with the rand per litre (RPL) up 7%, Wines of South Africa (WoSA) figures show. This increase follows on from a trend established in the previous year, which saw export value increase by 23%, coupled with a 15% rise in the RPL of South African wines.

However, the sales of wines in all price tiers are seeing a steady rise. Value sales may be increasing at a faster rate than volume, but volume sales do still continue to rise, with export volume to the UK up by 12% last year, off the back of a 7% jump in 2020.

WoSA CEO Siobhan Thompson told db earlier this month that she believes the perception of bulk wine needs to change. “The word bulk is a very dangerous word, because it’s about unpackaged wine, and unpackaged wine doesn’t have to be low quality,” she said. Read more on that here.