Being a wine farmer in today’s volatile climate (literally and otherwise!) means you have to keep your wits about you. We keep up to date with industry happenings to make sure we make the best wine we can. So naturally we attended the Nedbank Vinpro Information Day, held in Somerset West. Some of the world’s foremost authorities spoke about different aspects of the industry and over the next two posts we’ll share the highlights, starting with the interesting trend of increased bulk exports.
Bulk wine refers to wine not yet in its final packaged format. Producers will typically export in large tanks and have the product filled overseas, closer to the intended retailer. Exporting in this format is attractive because it usually means more profit at certain times, cutting out costs of corks, bottles, etc, depending on the exchange rate. It also holds a green advantage since it is more environmentally friendly. And from a quality perspective it is often found that wine travels better in large format, with less temperature fluctuations and no issues of bottle shock.
Having said that, on the negative side we have seen a number of local bottling plants closing down because clients choose to fill their product overseas, which leads to significant local job losses. The biggest problem is long-term sustainability, as the wine brand then gets owned by the buyer or retailer. This takes power away from the producer, so in the long run they will be price takers.
Even though some companies specialise in bulk exports, most producers use this in conjunction with the export of their final product. Some fear that bulk wine export threatens the local export market and economy, but Mike Veseth, author of Wine Wars, says it really should be complementary to bottled wine, not competition. But, he warns, the bulk wine must be of good quality, otherwise both the packaged and bulk wine prices will suffer.
South Africa’s bulk wine prices have remained stable over the years, according to VinPro, as opposed to that of Australia, Chile, France and Spain.
At Excelsior, we export 80% of our bottled wine production. The remaining wine is sold locally. We do sell wine in bulk, but this is wine that we do not require for our own brands or, or wine we don’t deem high enough quality.