Turning grapes and wine into profit is a tough business; there are, however, many positives to focus and build on. Christo Conradie, manager of VinPro’s Wine Cellar division, outlined the financial realities facing wine grape producers and wineries, at the annual Nedbank VinPro Information Day in Cape Town.
Only 15% of wine grape producers are currently profitable, with a net farming income higher than R21 000 per hectare, and 30% making a loss. “Input costs are rising sharply, with income not keeping up,” said Conradie.
Producer cellars need R4.44/litre white wine sold in bulk to break even, and R6.09/litre for bulk red wine. However, the local sales price for these categories were R4.46/litre and R5.81/litre respectively.
Conradie reiterated that improving these figures are not the responsibility of retailers or wholesalers, but need to be tackled by the industry as a collective. The industry is already addressing various aspects that effect wine businesses, which include initiatives from the Wine Industry Strategic Exercise, such as a transformation plan, projects focusing on energy efficiency, as well as price-point analyses and closer collaboration with government.
“It’s tough, but there are many positives to focus and build on, such as an increase in local wine sales, world-class wines, passionate winemakers and growth in wine tourism,” said Conradie.
“Take a good, hard look at your business, identify those aspects that can improve, challenge the status quo and have the guts to change it!” he urged the industry. Continuous monitoring of progress, bringing external expertise to the boardroom and a greater focus on the consumer preferences are also needed.