After several years in the doldrums, wine sales volumes are finally picking up in SA, and none too soon for the beleaguered local industry. The latest data from SAWIS shows an encouraging trend: After growing by 4.5% y/y in 2006 from 2005 levels, sales at local cellars, co-ops and sales to producers rose by 5.6% y/y in December and accelerated to 6.5% y/y in January.

The January data also shows 8.2% growth for the three months November – January compared to the same period a year earlier, 9.2% growth for the six months August-January and 4.1% for the 12-month period.

Interestingly, sales for the wine component of alcoholic fruit beverages are substantially lower – by about 23% y/y for the 12 months to end-January 2007 and down almost 30% for the six months to end-January 2007, SAWIS reports.

In an interview with WineNews following the group’s financial results, Distell CEO Jan Scannell said he was optimistic about the local wine market for 2007, expecting better growth in wine sales by both volume and value for the year compared to 2006 levels. For the six months to end-December 2006, Distell reported local wine sales volume growth of 4.6% y/y, compared to only 0.9% growth a year earlier.

In 2006 SA’s largest wine company saw strong local sales growth in its core brands of Drosdty Hof, Nederburg, Durbanville Hills, Fleur du Cap and Two Oceans on the back of stepped-up marketing efforts and higher consumer spending, he reported.

“This is part of the continuing premiumisation trend among South African consumers,” Scannell pointed out. “And apart from the middle or premium market, we’re also seeing good sales growth in our ‘basic’ market-targeted wine brands like Tassenburg and Overmeer. Consumers are moving up to these wines from the very low end of the market as well. This bodes well for the entire market in 2007.”

Distell has embarked on several new marketing and advertising initiatives for its key brands in the past few months, informed by fresh consumer research. “We will be expanding our brand-building efforts even more this year,” said Scannell. “We are definitely expecting better growth in local wine sales by both volume and value in the year ahead.”

Other brands such as Van Loveren, Simonsvlei and Spier have also come to the party on the marketing front, as have supermarkets like Pick ‘n Pay – the giant retailer has put additional marketing spend behind its wine offering with inventive new displays, special wine selections, food pairings and an extensive education effort for both its wine shelf packers and consumers.

On the export front, SAWIS data for January also paint an encouraging picture for sales, albeit for only a short period so far: Export volumes rose 19% in the first month of 2007 versus the year-earlier period, while for the three months November 2006-January 2007, export volumes were 13.8% higher. For the six months to end-January, exports were basically flat on year-earlier levels, and for the 12 months to end-January, exports were still 3.3% down.

When January’s domestic and international sales figures are combined, total wine sales were 11.5% higher versus January 2006, 10% up for the three months to end-January, 4.3% higher for the six months to end-January and almost unchanged for the 12 months to end-January. These are encouraging figures.

Although the wine sector has played the poor cousin to brown spirits, premium beer and ready-to-drink alcoholic beverages in the growth stakes so far in SA’s ongoing economic boom, producers have reason to be a bit more optimistic this year. With the South African government forecasting continued robust economic growth of around 5% for 2007, the sustained higher incomes being generated are likely to support a more rapid rise in wine sales – and a bigger marketing effort can only help the cause.