South Africa to grab more share in Nigeria’s wine market

South Africa may grab more market share in Nigeria’s wine market as global wine production is expected to hit an all-time low in half a century due to extreme weather in Italy, France and Spain, according to a global wine organisation.

The Paris-based International Organisation of Vine and Wine (OIV), has forecast that total world output would fall by 8.2 percent from last year to about 247 million hectolitres. This has potential to raise prices and dissipate a global surplus caused by a demand slump in the wake of the financial crisis.

The OIV puts the value of the global wine industry at about 75 billion euros ($88 billion). Countries with large grape harvests, such as Australia and South Africa, will probably be more active in the wine trade this season.

Nigeria’s wine market was valued at $300 million in 2012 and projected to be worth over $370 million by 2015 and a compound annual growth rate (CAGR) of 6 percent with red wine accounting for 74 percent of sales. South African wine exports to Nigeria grew by 12 percent for the 12 months to March 2012.

“Europe holds the lion’s share of the Nigerian market with 60 percent of volume sales, but South Africa is the next biggest player with a 22 percent volume  share” Sapta Bhattacharyya, associate vice-president of global research company, Aranca told the Drinks Business, a specialised wine publication.

Bhattacharyya estimates that 5.2 million people, representing the top 10 percent of earners among Nigeria’s over 180 million population, account for 43 percent of wine consumption in the country. With most economic activity taking place in Nigeria’s key cities of Lagos, Abuja, Kano, Kaduna, Onitsha and Port Harcourt, wine markets are being identified and developed with luxury hotels and restaurants catering to the affluent consumers in these areas.

In 2015, exports of mostly red wine to Nigeria from South Africa had risen to 4.5 million litres a year, while exports to Angola of mostly bubbly wine had risen to 6 million litres, 5 million of which are sparkling wines, mainly J.C. Le Roux, a low cost sparkling wine that retails for about N900 ($4) in South Africa.