Can African Wines Break Into New Global Markets? - African Business Magazine
Close
Can African Wines Break Into New Global Markets?

Can African Wines Break Into New Global Markets?

The drinking of wine has traditionally been associated with European culture but this is now rapidly changing as the beverage finds increasing favour in the East – and in Africa to some extent. Can the continent’s wine producers cater to this new taste and find exciting new markets for their products?

Wine making has its roots firmly entwined within human civilisation itself. For thousands of years, people have cultivated the grape, drunk its fermented juices and they liked it so much they created gods, such as Bacchus, in dedication to it.

Millennia later, the global market for wine is vast and the demand for alcoholic beverages as a whole is predicted to rise over the next decade. Wine, which currently makes up a relatively low proportion of consumption compared to beer and spirits, it is thought, will eat into the market share of its more dominant rivals. The reasons for this are varied. Among them are wine’s health-giving properties when consumed in moderation.  

This growth in the demand for wine is being driven by lifestyle changes in emerging markets brought on by greater affluence. Demand from China is leading the surge, but so too are the tastes of consumers in Russia and India, potentially adding many hundreds of millions of drinkers to the established historical centres of wine lovers in Europe – still by far the largest market – and North America, which have shown a decline in wine consumption in recent years.

France is still the world’s dominant wine producer, a position it recently regained from Italy. But Europe’s ‘Old World’ wine makers have been facing increased competition from the ‘New World’ – Australia, South Africa and Chile among them.

However, it seems that ‘Old World’ wine, especially French, has consolidated its position by being swifter to take advantage of the emerging markets, most notably China. It seems the historic brand of French wine is more appealing to the new consumers in the East. Climate change is perhaps the single most important factor that the wine industry has to manage over the next 50 years and beyond. It has the potential to change the face of wine production forever, and signs that this is happening are already visible.

It is feared, for instance, that the Champagne region of France may soon be too warm to produce Champagne. Indeed, Champagne grapes are currently being grown to an acceptable standard in Britain.

South Africa’s vintners are grappling with the issue of climate change. The nation’s centuries-old wine industry is the most established on the continent. According to the Wines of South Africa organisation, the country is seventh on the list of the world’s largest wine producers. One report has found that South African wine is now more popular in the UK than its French counterpart.

Wine centres shifting

Traditionally, South Africa’s climate – similar to the wine-growing regions of the Mediterranean – has been well suited to wine growing. The dry summers and cooling ocean breezes delayed the ripening process.

But in recent times, rain during the best time for harvesting grapes has led to the risk the fruit will rot and has forced South Africa’s vintners to begin their harvests early, which produces, essentially, a different wine.

All businesses need to adapt to market trends and be able to diversify. However, replanting a vineyard is an expensive process and, more to the point, a replanted vineyard takes years before it produces sufficient yield and even longer to return to profit.

Thus expanding into multiple markets will help South Africa’s wine makers ensure there is always a demand for their product. Most tantalising in that regard is China, which is now the world’s seventh largest consumer of wine by volume.

Other well-established wine industries in Africa are to be found, not surprisingly, on the Mediterranean. The Maghreb region of North Africa has a wine-making tradition that goes back thousands of years. The three countries of this region, Tunisia, Morocco and Algeria, benefit from a good grape-growing climate, similar to that in Spain – itself a major producer.

However, despite its long history of wine making, favourable conditions and the occasional wine being recognised worldwide, the region’s industry has failed to make a significant impact on the global market.

Heavy French influence in the region shaped much of its wine making, but for various political, economic and religious reasons, the sector did not receive the support it might have. This, though, is beginning to change.

The Meknes region of Morocco, nestled at the base of the Atlas Mountains, lends itself particularly to wine making. Les Celliers de Meknès, based in Morocco, produces approximately 30m bottles a year, 10m of which are for export, which leaves 20m for the Moroccan market.

The Château Roslane brand is the first of its kind in the country. It employs many of the ultra-modern wine-making methods found in Europe, and this allows it to produce some 20,000 bottles per hour. But the company is making moves to expand into emerging markets by entering into a commercial arrangement with a Chinese bottling company. Given the limited potential of the domestic market, expanding into foreign markets is a necessity.

Like Morocco, Algeria has a rich wine-making history, but now produces only a tiny fraction of its peak output (in the late 1930s) of around 500m gallons. Today, production stands at 15m gallons but a programme of new vine planting is expected to almost treble that figure in the next few years.

As had been the case with Moroccan wine, Tunisian wine was exported to Europe and blended with French wine, until the Treaty of Rome made this practice illegal in 1957. The home market for Tunisian wine is modest, with research suggesting consumers opt for the cheapest varieties. Like the rest of the region, there is a need to re-establish wine-making knowledge among the local population, to rely less heavily on experienced Europeans, and to create a wine-drinking culture that appreciates quality as well as thrift.

Expanding the market

A healthy wine-making industry benefits a country in many ways; for example, it can boost rural economies and help prevent migration to the cities. A wine maker that adds value to its product by taking control of its supply chain can generate wealth to small local businesses too and, no less significantly, make his or her wine more marketable to the world’s expanding middle classes.

Even in countries that are keen to increase wine production, the consumption of wine in Africa, albeit on the increase, is still at relatively low levels. Urging greater consumption of alcohol of any kind is a sensitive issue that must be handled delicately.

Of the major wine-producing nations, South Africa ranks among the lowest when it comes to domestic consumption. This may be due to the lack of a wine-drinking culture among the majority of the population.

Ignorance of the pleasures and benefits of wine has been identified by the industry as a barrier to its uptake. A campaign that makes use of wine fairs, wine tourism and greater links to the food industry can help change people’s attitudes to wine. However, the industry must be careful not to encourage the pompous idea that a person has to have a good knowledge of wine to enjoy it, intimidating and deterring potential consumers.

Of the African nations that produce little or no wine, Nigeria has shown an increasing taste for wine over the last decade. Although still small compared to the beer market, which dominates two thirds of the alcoholic beverage market, wine consumption is growing, and social changes within Nigeria as the country’s wealth increases are making wine a more popular choice than it used to be. Since 2004, wine consumption per capita has gone up from 0.1 to 0.4 litres, according to a report from Global Trade. The Nigerian example is matched, to a greater or lesser degree, across the continent.

The pattern of wine production and consumption is changing. Traditional centres for the making and drinking of wine are beginning to see a shift toward other regions. It will be some time before the European powerhouses will have to look up to anyone else, but with China and India and other emerging markets developing a taste for fine wine, there is the opportunity for African producers to become part of the altering landscape.

Rate this article

Author Thumbnail
Written by African Business Magazine

African Business and its award-winning team is widely respected for its editorial excellence. We provide the all important tools enabling you to maintain a critical edge in a continent that is changing the world. Our special reports profile a wide range of sectors and industries including Energy, Oil and Gas, Aviation, Agriculture to name but a few.

Related Posts

Join our mailing list

If you would like Independent, Informative and Invaluable news analysis on the African continent, delivered straight to your inbox, join our mailing list.

Help us deliver better content