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South Africa Promotes Expensive Wines to Boost Exports

Published on Sep 17 2015 5:17 PM in Drinks tagged: Wine / Export / South Africa

South Africa Promotes Expensive Wines to Boost Exports

South African wine makers are promoting higher-priced bottles to boost sales in established European markets and make inroads in the US and Asia where they hardly have a presence, the head of a local industry organisation said.

Wine exports declined to 422.7 million litres  last year from 525.6 million litres in 2013, according to the Wines of South Africa trade body.

Sales abroad in 2015 may be on par with last year’s or rise just above that, with packaged-wine exports expected to increase as much as five per cent even as bulk shipments fall by about the same amount, Wines of South Africa Chief Executive Officer Siobhan Thompson said in an interview in Cape Town on Tuesday.

South Africa is the world’s seventh-biggest producer of wine by volume, representing 4 percent of global output last year. The country grows white wine grapes, including chenin blanc, chardonnay and sauvignon blanc, and its red varieties include pinotage, which was created in South Africa. The country’s almost 100,000 hectares (247,100 acres) of vineyards are mostly concentrated in the Western Cape and the industry employs 300,000 people.

While weakness in the rand is helping exporters, businesses in Africa’s most industrialised economy are facing power shortages and higher labour costs. The currency has declined 14 per cent against the dollar this year, while the state power utility has at times imposed controlled blackouts because of inadequate generating capacity.

The country wants to improve marketing of premium-quality wines in some of its top export markets, including the UK and Germany, progressing from the mid-range price band to help boost profit margins, said Thompson. Producers see a strong potential for export growth in the US and Asia, from a low base currently at one per cent to two percent share of those wine markets, respectively, and to other African countries, she said.

“The idea is to get into the higher price bracket, better profitability to put back into our vineyards and give back to our people,” Thompson said. “It’s really all about how we promote our wines and what we say about our wines.”

News by Bloomberg, edited by ESM. To subscribe to ESM: The European Supermarket Magazine, click here.

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