South Africa’s wine industry, a cornerstone of its agricultural sector, is navigating a complex landscape in 2025. While the country remains a significant global wine producer, it faces a confluence of challenges that threaten its sustainability and growth.
The financial health of South African wine producers is deteriorating. In 2023, net farm income per hectare plummeted by over 36%, with only 8% of producers remaining profitable. This downturn is attributed to several factors:
- Rising Production Costs: Inflation and increased input costs have outpaced revenue growth.
- Declining Yields: Adverse weather conditions and aging vineyards have led to reduced grape production.
- Market Volatility: Fluctuating demand and prices have strained financial stability.
Consequently, many producers are exiting the market. A report by the USDA Foreign Agricultural Service, indicated that the number of wine grape producers is declining, with an average drop of 3% per year from 3,596 producers since 2010. The number of wine cellars has also declined, particularly among small-scale producers.
Policy Challenges
The government’s proposal to increase wine excise taxes by up to 80% has sparked significant concern within the industry. South Africa Wine, the national industry body, warns that such drastic measures could lead to widespread job losses and financial instability.
The wine sector supports over 270,000 jobs and contributes R56 billion to the economy annually. These proposed increases threaten the sustainability of the industry and could have severe socio-economic consequences.
This includes jobs in vineyards, wineries, packaging, retail, and wine tourism. The wine industry also generates foreign exchange through exports, supports rural development, and contributes to tourism revenue.
South Africa Wine, the national industry body, has raised serious concerns about the potential impact of proposed changes to excise taxation on the wine sector’s sustainability and global competitiveness.
Outlined in National Treasury’s Excise Taxation Policy Paper released in November, the proposals include above-inflation annual increases, raising the tax incidence from 11% to 16% of the retail price, and shifting from per-litre pricing to an alcohol-content-based model.
The plan also introduces progressive tax bands, with higher rates for wines with higher alcohol content.
“The progressive taxation proposal is especially problematic. With 80% of South African wines having alcohol content above 9%, we’re looking at a staggering 72% weighted average increase in excise rates across the industry. This is unsustainable for many producers, particularly small-scale farmers and cellars,” said South Africa Wine CEO, Rico Basson.
Climate Change and Environmental Stress
Climate change is exacerbating existing challenges. Rising temperatures and unpredictable weather patterns have led to:
- Increased Pest and Disease Pressure: The spread of pests like Xylella fastidiosa threatens vine health.
- Altered Grape Composition: Warmer conditions have led to higher sugar levels in grapes, resulting in wines with higher alcohol content.
- Aging Vineyards: A significant portion of vineyards are over 15 years old, leading to reduced yields and increased vulnerability to environmental stresses.
International Investment
Amidst domestic challenges, international interest in South African wine estates is growing. Notably, French investors have acquired several prominent estates in regions like Stellenbosch, attracted by the favourable terroir and lower land costs compared to Europe.
These investments aim to tap into the growing global demand for South African wines.
In response to economic and environmental pressures, a new generation of winemakers is focusing on quality and sustainability. This shift has garnered international acclaim, with critics praising South African whites among the world’s best.
South Africa remains a leading wine-producing country, but its industry faces mounting challenges. According to Dr. Erna Blancquaert, viticulture researcher at Stellenbosch University, only 8% of wine farms are profitable, while 46% make minimal profit, 3% break even, and 43% operate at a loss.
Ownership and Profitability Landscape
Black-owned wineries, in particular, face a 68% risk of closure if sales bans or excise hikes persist.
South Africa’s wine industry has seen a wave of acquisitions and foreign investment in recent years, reshaping ownership patterns and injecting much-needed capital into the sector.
In 2022, DGB, one of South Africa’s largest independent wine and spirits producers, invested in 136 hectares of prime vineyards in the Helderberg region. The move forms part of the company’s broader strategy to preserve and promote the unique Cape terroir.
In 2023, DGB further expanded its footprint with the acquisition of Avontuur Wine Estate, located along the R44 between Stellenbosch and Somerset West.
That same year, Chinese businessman William Wu acquired a 51% stake in Swartland Winery, which produces the equivalent of 24 million bottles annually and exports over half of its output.
The investment aims to meet growing Chinese demand for South African wines and deepen trade ties between the two countries.
In 2024, Van Loveren, a family-run winery founded in 1937 in Robertson, acquired Neil Ellis Wines, a well-regarded Stellenbosch producer known for its terroir-focused wines.
This followed Van Loveren’s purchase of the Survivor Wines brand and the Overhex cellar earlier in the year—moves that significantly bolster its presence in the premium wine segment.
Foreign interest, particularly from Europe, continues to surge—most notably from France and Germany.
- Les Grands Chais de France, a family-owned Alsatian group, acquired Neethlingshof in 2022 and Villiera in 2023, marking significant French investment in Stellenbosch.
- AdVini, a major French wine conglomerate, now owns a portfolio that includes L’Avenir, Le Bonheur, Ken Forrester, Stellenbosch Vineyards, and Kleine Zalze.
- Baron Hans von Staff-Reitzenstein, a German property magnate, has quietly assembled more than 1,000 hectares in the Helderberg region, acquiring key holdings in Stellenzicht, Ernie Els Wines, and Alto.
South Africa’s comparatively low land and operating costs—paired with its world-class terroir—make it an attractive destination for international investors. These acquisitions offer foreign stakeholders access to established brands, mature vineyards, and well-developed export networks.
Beyond capital injection, such investments are bringing global expertise, infrastructure upgrades, and broader market access—boosting the competitiveness of South African wine on the world stage.
Ownership Breakdown
| Ownership Type | Profitability | Characteristics |
|---|---|---|
| Foreign-Owned | Mixed | Access to capital and global markets |
| Locally-Owned | Varies | Heritage-focused but under pressure |
| Independent | Predominantly low | Artisanal, niche, but not scalable |
| Conglomerate-Owned | Generally profitable | Scale advantage and market dominance |
This all comes amid a changing global viticulture landscape with the launch late last month of Vinarchy, a wine conglomerate formed through the merger of Accolade Wines and Pernod Ricard’s wine operations in Australia, New Zealand, and Spain.
Valued at over AU$1.5 billion in annual net sales and backed by Australian Wine Holdco Limited (AWL) – a consortium of international investors – Vinarchy now oversees 11 wineries across four countries, including South Africa.
The group produces more than 32 million nine-litre equivalent cases per year and owns Berri Estates, the largest winery in the Southern Hemisphere.
Flagship brands include Hardys (the world’s #2 Australian wine brand), Campo Viejo (the top Rioja brand globally), and Jacob’s Creek, ranked among the world’s ten most valuable wine labels.
Combined, these three generated more than AU$2 billion in consumer sales in 2024.
In South Africa, Vinarchy’s holdings include Flagstone and Kumala, located on a repurposed De Beers dynamite factory site in Somerset West.
The company’s name—Vinarchy—blends vin (French for wine) and archy (from the Greek for leadership), symbolizing its ambition for global wine dominance.
