Reports on local market mixed as wine exports storm UK

    The weakness of the rand against the euro has enabled South African wine exports to take market share from European and Australian producers in the important UK and continental European markets, according to umbrella body Wines of South Africa (WOSA) and wine and spirits conglomerate Distell.

    But there are mixed reports on the state of the market for wine in South Africa. According to Tai Collard, the managing director of the Cape Town-based Wine of the Month Club - believed to be the largest on-line marketer of wine in the country, with more than 300 000 members who regularly order cases of carefully chosen wines - "wine sales have plummeted" due to the combined effect of the economic downturn and higher excise duty. The duty increased by a further 2 percent in the most recent Budget.

    He said the local market's demand for natural wine had essentially shown zero growth for the six months to August last year, while the wine market in the UK was facing tough times. Although wine sales in the UK grew by 6 percent to e5.6 billion (R65.4bn) in the year to August last year, "growth has now come to a standstill".

    Collard said there was now a wine glut. "There is still too much out there."

    However, Ray Edwards, liquor manager of Spar supermarkets, which has 500 outlets and 400 separate liquor stores, said on Friday: "We are very happy with sales. We have not seen much of a change, people seem to be drinking as much as ever despite the downturn.

    "They may be buying down and choosing cheaper wines, but there always seems to be a demand for the better brands we have in stock, such as Nederburg and Chateau Libertas."

Pick 'n Pay reported a 30 percent rise in wine and other liquor sales in the run-up to Easter.

    A spokesman for Checkers/Shoprite said that wine sales in the group's stores were continuing to grow "at a satisfactory rate. Customers do, however, seem to be trading down in their purchases and looking for better-value wines."

    Su Birch, chief executive of WOSA, said that although the UK's total wine sales were down, the rise of the euro had helped South African exporters to take market share from both continental Europe and Australia. Vineyards in Australia had been faced with rising costs for water because of the drought.

    Distell reported in January that it had launched a new value range in the UK called Danger Point, which was now being marketed by the Threshers chain with more than 1 000 outlets. It was also increasing its business with the Waitrose supermarket chain.