Q1 2025 Market Review Wine starts 2025 on shaky ground, but there are pockets of growth to be found

After a record-breaking close to 2024, South Africa’s wine industry entered the new year with noticeably less momentum. According to the latest Market Review, the first quarter of 2025 has proven challenging. ‘We’re seeing the impact of low consumer confidence play out in real time,’ says Oelof Weideman, Head of Insights & Business Advisory.

South Africa’s Consumer Confidence Index plummeted from -6 in late 2024 to -20 in Q1 2025, its lowest point in years. ‘That number isn’t just a data point,’ Weideman explains. ‘It reflects real sentiment. Right now, South Africans are worried. And when confidence drops, so does consumer spending.’

This pessimism is persisting despite marginal improvements in macroeconomic indicators. The Consumer Price Index has dropped to 2.7%, below the Reserve Bank’s target range. Food inflation remains modest at 2.5%, and GDP growth is inching upward at 0.6%. However, these gains have yet to make an impact at household level. The job market remains tight, and wine is feeling the pressure.

Performance Under Pressure

In value terms, wine sales declined by 2.6% year-on-year in Q1 2025, with a sharper 4.9% drop in 750ml still wine volume. ‘For the first three months of the year, wine was the worst-performing liquor category in South Africa,’ notes Weideman.

One area of growth is in shopping frequency: consumers are now visiting retail outlets 4.8 times per month, up from 4.4. However, this doesn’t imply increased spend. ‘More trips don’t mean more money,’ says Weideman. ‘They often signal heightened price sensitivity and rising expectations.’

Larger-format packaging is showing resilience, particularly 1-litre products. Products priced under R50 are also gaining traction, offering simplicity and affordability. Meanwhile, high-volume bag-in-box formats have taken a knock due to price hikes and reduced promotions, resulting in a drop in volumes and evidence of consumers exiting the category entirely.

Pricing Pressure and Value Tiers

The wine market is particularly sensitive to price thresholds. Once prices cross into triple digits, sales often slow, discounting increases, and promotional reliance increases. The traditional powerhouse (wines priced under R80) has shrunk by 6.4%. The only segment with modest growth is between R100 and R200, up just 1.2%.

Varietal Trends

Chenin Blanc and Chardonnay have posted small gains (+1.8% and +0.9%, respectively), but declines are evident across Rosé, Shiraz, Sauvignon Blanc, white blends, Merlot, Cabernet, and Pinotage. Red blends, once a volume staple, have dropped below the 10-million-litre threshold for the first time in recent memory.

Retail Dynamics and the Rise of Selectivity

Retailers are also feeling the squeeze. Although the number of product options continues to increase, only 5.5% of SKUs generate 80% of total wine sales. ‘Consumers facing choice overload tend to stick with what they know,’ Weideman notes. This underlines the need for smarter shelf strategies and tighter, insight-led ranges.

Some alternative formats are outperforming, especially single-serve and canned sparkling wines. However, these may be competing more directly with flavoured alcoholic beverages than with the broader wine category. There’s also uncertainty about what drives their popularity; whether it's the convenience, sweetness, or higher alcohol content, rather than a connection to wine itself.

A Glimmer in the Glass: Premiumisation

Premiumisation remains a bright spot, particularly in on-trade environments. While people are going out less, they’re choosing to make those outings count, often opting for higher-quality wine experiences. It’s a shift from quantity to meaningful occasions.

Looking Ahead

Success in the months to come will depend on how producers and retailers balance brand value with consumer reality; adapting pricing, messaging, and distribution to meet people where they are.

‘The start of 2025 has been sobering,’ Weideman concludes. ‘But the South African wine industry has always shown resilience in the face of adversity.’

For the full report and more insights, visit: www.vinimark.co.za