Bad news about South Africa’s wine industry

South Africa’s wine industry has had a challenging start to 2025, marked by low consumer confidence, market uncertainty, and declining sales.

However, opportunities remain for brands that can offer affordable, well-positioned products and adapt to shifting consumer behaviour.

This is according to Vinimark’s latest Market Review, presented by Head of Insights & Business Advisory Oelof Weideman.

He explained that, after a record-breaking end to 2024, South Africa’s wine industry entered the new year with noticeably less momentum.

“We’re seeing the impact of low consumer confidence play out in real time,” Weideman explained. The country’s Consumer Confidence Index plunged from -6 at the end of 2024 to –20 in the first quarter of 2025, the lowest in years.

“That number isn’t just data,” Weideman stressed. “It tells us how South Africans are feeling. Right now, they’re worried. And when sentiment drops, so does spending.”

This lack of confidence persists despite macroeconomic signals showing slight improvement. For example, CPI inflation was low at 2.8% in May, which is below the Reserve Bank’s target range.

However, those green shoots haven’t reached household level, the job market remains strained, and wine sales are under pressure.

Wine consumption has been declining globally. In 2024, it fell 3.3% to 214 million hl, the lowest level since 1961, according to estimates by the International Organisation of Vine and Wine (OIV).

“The effects of lingering inflationary pressures and market uncertainty have affected price and consumer attitudes,” said OIV director general John Barker in an online press briefing.

“We also continue to observe the effects of a long-term decrease in consumption in several mature markets shaped by evolving lifestyle preferences, shifting social habits and generational changes in consumer behaviour.”

Growing price sensitivity

Weideman explained that, in value terms, wine sales declined 2.6% year-on-year in the first quarter of 2025. The drop in volume is even more pronounced, with 750ml still wine falling nearly 5%.

“For the first three months of the year, wine was South Africa’s worst-performing liquor category,” Weideman said.

However, he noted that there has been an increase in shopping frequency, with consumers visiting stores 4.8 times per month, up from 4.4.

This could signal greater willingness to explore deals and try new brands, but it doesn’t necessarily mean consumers are spending more.

“More trips don’t mean more money,” Weideman explained. In fact, they mean “more price sensitivity and higher expectations”.

Fortunately, some formats are attracting interest. For example, larger-format bottles like one-litre wines are gaining traction.

Stock-keeping units (SKUs), which retailers use to keep track of stock internally, priced under R50 are also on the rise, offering affordability without complexity.

On the other hand, 4th Street’s recent 13% price hike on its 5-litre bag-in-box wines, paired with reduced promotional activity, has led to notable volume losses.

“We had hoped that value-led brands like Raindance Wines would absorb those consumers. Unfortunately, it doesn’t look like that’s happening, and instead, the 4th Street consumer is simply moving out of the wine category,” Weideman said.

As wine prices move from double digits into triple digits, there’s often a noticeable impact: slower sell-through, deeper discounting, and a heavier reliance on promotions to maintain momentum.

This trend is reflected more broadly across the market. The sub-R80 segment, historically the category’s engine room, has declined by 6.4%.

The only tier that showed any real movement was between R100 and R200. However, even there, growth was only a modest 1.2%.

When it comes to varietals, Chenin Blanc and Chardonnay continue to show small gains, growing 1.8% and 0.9%, respectively.

However, Rosé, Shiraz, Sauvignon Blanc and white blends have all declined. The same is true for reds like Merlot, Cabernet and Pinotage.

Red blends have also dipped below the 10-million-litre mark. Weideman said this was the first time he had experienced this.

Retailers feel the heat

Retailers are also feeling the pressure. While SKU proliferation continues, only 5.5% of products generate 80% of total wine sales.

“When consumers feel overwhelmed by too much choice, they default to what they know,” Weideman explained. That makes range rationalisation and smart shelf strategy more important than ever.

Chateau Del Rei’s canned sparkling wine continues to outperform, but Weideman said it’s probably competing more with spirit coolers than the wine or sparkling wine category.

The spirit cooler category, also known as flavoured alcoholic beverages (FABs), is actually showing growth.

“And it’s not clear if consumers are buying it because it’s a sparkling wine product, or just for the high alcohol content, high sugar content and affordability, none of which speak to the wine consumer,” he said.

Premiumisation is an encouraging trend, though this is mainly in the on-trade. While people are going out less often, when they do, they’re more likely to order a better bottle.

According to Weideman, it’s no longer about quantity; it’s about making the occasion count. The producers and retailers who will come out ahead this year are those who can protect their brand value.

At the same time, they need to remain in tune with the realities on the ground and use the right pricing and messaging.

“The start of 2025 has been sobering, but South African wine has always shown resilience in the face of challenge,” Weideman said.