South Africa’s wine industry is gaining increasing international recognition, and for investors looking for non-traditional opportunities, the market presents a potentially lucrative avenue. With wine increasingly viewed as an asset class, investment in South African wine—particularly the celebrated varieties such as Chenin Blanc and Pinotage—can offer both financial and personal satisfaction. However, as with any investment, wine requires careful consideration and is not without its challenges.
Michael Fridjhon, the founder of Winex, highlighted in a recent interview with Kaya Biz that investing in wine requires a broad perspective. While there are opportunities for profit, it is essential to view wine as more than a mere commodity.
“If you’re thinking of wine purely as a commodity, there’s no sentiment, no attachment to quality. All you’re focused on is its future value,” he said. Fridjhon points out that this approach comes with notable drawbacks. Not only do investors miss out on the enjoyment of their hard asset, but wine can also be a challenging investment to liquidate in the South African market. Auction houses, one of the few avenues for selling fine wines, often charge commissions that significantly reduce the seller’s profit.
Instead, Fridjhon advocates for viewing wine as a “sentimental and emotional investment,” akin to purchasing art or unique experiences. Collectors should start by buying wines they enjoy, later rationalising their collections and selling surplus wines when necessary. This method not only offers enjoyment in the short term but also the possibility of returns in the future.
In 2023, South Africa’s total wine export volume dropped to 306 million litres, with exports of still-packaged wines declining by 17.3%. Despite this fall in volume, the wine industry reported a rise in value, with revenues reaching US$540 million (R10 billion). The decline in red wine exports—down by 9.4%—was significant, yet red wine still accounted for 32.3% of all natural wine exports.
These figures suggest a complex landscape for South African wine producers, one where international demand remains steady, but production volumes fluctuate. A key driver of this dynamic is the growing demand from China, a market that has become increasingly important for South Africa’s wine industry since 2019. Fridjhon sees the potential for even greater growth if trade agreements, such as duty-free access for South African wine, can be negotiated by the Government of National Unity (GNU) and the Department of Trade and Industry (DTI).
On the premium end of the market, South Africa has experienced a remarkable resurgence in recent years, largely driven by a new wave of “young, ambitious, technically competent” winemakers. These producers often work with old, obscure vineyards where the concentration of fruit results in high-quality wines that are gaining international attention. South Africa has become the focus of many global wine critics, who now regard the country as a leading producer of some of the world’s most exciting wines.
Pinotage, a grape variety unique to South Africa, and Chenin Blanc, which accounts for 18.4% of South Africa’s total plantings, are two notable examples of the country’s distinct wine offerings. International critics have also praised South Africa’s Cabernet Sauvignon, with Stellenbosch widely recognised as “Cabernet country.” Meanwhile, the country’s Chardonnay wines are reportedly “rubbing shoulders with the best in the world,” according to Fridjhon.
These small-batch wines are rare and highly sought-after, but their scarcity can present a challenge for investors. Once a collector acquires such wines, they are often reluctant to sell, and auction houses are frequently the only option for liquidating such assets.
South Africa’s wine industry is in a state of flux. While the bulk wine sector is influenced by market trends and external factors such as trade relationships, the high-end sector continues to thrive, driven by small producers and increased global recognition. For investors, South African wine presents an intriguing opportunity, but it is essential to approach it with the understanding that wine is as much about personal enjoyment as it is about financial gain. By investing in wines they love, collectors can enjoy their assets today while holding out hope for future profits.
