- South Africa’s may see a production shortfall of 170 million liters of wine
- Wine prices set to rise as much as 11% in 2018
South Africa, the world’s eighth largest wine producer has been hit by the worst drought on record. The government has declared the drought a disaster in the Western Cape. Is the global consumer demand going to be strong enough to offset increased wine prices?
Why This Matters: Consumers around the world enjoy 20 million glasses of South African wine daily. The latest report from Vinpro states South Africa’s wine-grape production was down 15% from last year, and would lead to a production shortfall of 170 million liters of wine. Wines produced in the region are expected to have prices rise as much as 11% in 2018. It’s not just grapes that have been hit hard by the drought in South Africa, wheat crops have been decimated as well. Also, pear, apple and grape exports have all been cut with more than a third of vineyards operating at a loss, according to Vinpro.
The problems in South Africa mirror those in other wine-growing countries and are likely to fuel concerns about changes in weather patterns as a result of global warming. Wildfires destroyed several wineries in California in 2017 though the level of production remains higher in the U.S. than other countries facing severe weather issues.
Situational Awareness: If we take a quick wine tour around the world, the U.S. remains the world's largest consumer of wine, with 3.26 billion liters of wine sipped in 2017. However, Italy is still the leading world wine producer at 4.25 billion liters, followed by France and Spain. Even if South Africa’s production legs get shorter there are several other countries able to pick up the slack.
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