From vine to glass – the economic reality

“Producers were able to breathe a slight sigh of relief after the 2025 season as productivity picked up and yields increased. Prices have also been increasing over the last two years, returning to more acceptable levels,” says Botha. This comes after a big price dip followed by very slow increases. While these factors bring some relief, rising input costs and broader macroeconomic challenges continue to create immense pressure. “This pressure keeps the industry at a crossroads - we do not know what the next harvest will bring, and uncertainty looms over whether price trends will continue to be favourable. Of course, our hope is that prices will at least remain constant or even increase.”

A Cautious Environment

According to Botha, current economic conditions, global tensions, and changes in consumer behaviour are creating a cautious business environment. “This simply means that producers are making increasingly strategic and data-driven decisions at the farm level. It is more important than ever for producers to make their operations more flexible and efficient.” She emphasises that this trend is evident not only from her interactions with producers, but the many different data sets generated through her work at Vinpro. “We are seeing a continuously stronger focus on improving production efficiency, optimising input and resource use, and importantly investing in resilience. Producers are always adapting to ensure that their cost structures and yield quality remain competitive, regardless of short-term price fluctuations, tariff tensions, or other economic pressures.”

Vineyard Age Implications

Statistics have long been showing a downward trend in area under wine grapes. “Broadly speaking, the area under wine grapes in South Africa has been on a downward trajectory, or at best stable but ageing,” says Botha. Official industry-level data shows that the industry area is at its lowest since 1997 and the average vineyard age is increasing. This is mainly because producers are postponing new plantings, due to cash flow constraints. There have been some positive signs, such as FNB’s announcement of additional replanting financing for their clients, but cash flow constraints remain a very real challenge and has a direct effect on the replanting rate and many factors beyond that.”

The fact that the planted area is no longer expanding, but in fact ageing creates additional economic pressure. “Older vineyards cost more to maintain, yields less output per hectare and has limited adaptability to climate conditions.” This perspective, she adds, positions vineyard replanting at a strategic level, rather than it merely being a maintenance item.

Botha explains that these statistics have two implications for producers at the farm level. As mentioned above, postponing replanting has a productivity and maintenance cost. “In addition, efficiency gains become harder to capture as the capital base itself is ageing.”

“There is a clear implication from an investment and strategy perspective – producers must either prioritise replanting or accept productivity decline and shift their strategy accordingly. Whether it is focussing on higher-value cultivars or improved viticulture or wine grape irrigation practices.”

Sun, Earth and Water

Botha confirms that water remains one of the most significant risk factors in wine grape production, as is the case across agriculture. “Factors such as inconsistent supply, rising tariffs and the effects of climate variability all add to production uncertainty. Especially in regions dependent on surface water, water availability is as much an economic issue as a climatic one, as limited water availability directly constrains yield potential and producers’ capacity to expand vineyards.”

This brings us to the cost of water management and how its increase has affected irrigation decisions made by producers. Botha says that several factors have directly influenced irrigation investment decisions, whether it blocks investment or encourages farmers to invest in more efficient technologies. “The cost of water management, from compliance to storage and pumping, has increased notably. Rising electricity and loadshedding have been key drivers in this trend and has directly influenced irrigation investment decisions.”

She adds that many producers have turned to solar systems. “Producers are increasingly responding to this challenge by installing solar systems to stabilise energy supply and reduce pumping costs. The shift has not only improved the reliability of irrigation but also impacted the timing and duration of water applications, allowing producers to irrigate more strategically.” She continues that solar has, in many cases, become the enabling factor for upgrading or expanding irrigation infrastructure. “Producers are far more likely to invest in efficient drip systems or automation once their energy costs and risks are under control. So, while the overall cost environment remains challenging, solar adoption has created an important opportunity for improved water-use efficiency and long-term cost stability.”

Precision Irrigation Adoption

Healthy but uneven. That is how Botha describes the rate of precision irrigation adoption in wine grape production. “Larger, more capitalised producers are leading in this regard, while smaller farms often face financial and technical barriers.” She adds that the potential impact of precision irrigation for wine grape producers will always be significant. “Particularly in fine-tuning irrigation scheduling, optimising water use, and linking soil and plant data to economic outcomes. Over time, the integration of precision irrigation materially improves both productivity and environmental performance.”

Two of the many key factors impacting the rate of adoption, is climate volatility, and sustainability requirements for exports. “Climate volatility is a massive risk factor affecting both yields and quality. There is increased frequency in the occurrence of heat stress, erratic rainfall and shifting phenological patterns. Furthermore, our data suggests that yield variability between seasons is increasing. This further adds to economic uncertainty.” On the other side of the coin, sustainability standards have become non-negotiable for most exporters. “These exporters are increasingly influencing operational decisions. Compliance drives producers to formalise water measurement, maintain records, and align with integrated resource management practices. Although it adds administrative cost, it also improves traceability and market access.”

Economic reality and decision-making

Botha emphasises that leading wine businesses base decisions on measurable efficiency gains and return on investment. “They of course look at key metrics such as yield per hectare, yield per cubic meter of water, cost per tonne produced and consistency of quality. Another important consideration is broader risk reduction value. It is not only about profit maximisation but about safeguarding long-term sustainability.

She concludes with advice to input suppliers: “Understand the producer's economic reality. Focus on solutions that are both technically sound and financially viable. Help producers quantify the economic return of irrigation improvements, whether through lower energy costs, reduced water losses, or improved yields. Lastly, collaborate: integrated planning between viticulturists, soil scientists, economists and irrigation specialists leads to better long-term outcomes.”