SA wine export decline puts industry under pressure

The decline in South African wine exports might cause the industry to contract, which will, in turn, result in jobs losses and less income to reinvest in wineries, vineyards and marketing, says nonprofit industry organisation Wines of South Africa communications manager Andre Morgenthal.

He notes that exports have been on a downward trend in the past year, owing to continued global economic diffi- culties, the strong rand and strong inter- national competition.

Yearly statistics, released by nonprofit industry organisation South African Wine Industry Information and Systems (Sawis), show a significant decline in South Africa’s wine exports since 2008 when total wine exports stood at 407.3- million litres.

Sawis information services manager Charles Whitehead explains that figures up to the end of September show a year-on-year decline of 22% in the export of South African packaged natural wines, while the current domestic growth is only 4.3%. “The recession and fluctuating exchange rate during 2009 and 2010 impacted on exports,” he adds.

Statistics show that 370.9-million litres of natural wine was exported in 2010, which is a decrease of 18.2-million litres on the 389.1-million litres exported in 2009.

However, Morgenthal expects South Africa to see a turnaround in the export market within the next two years, as the wine industry is, like most other agriculture industries, cyclical.

The UK is the biggest importer of South African wine, with 28.2% of natural wines shipped to the country yearly. Germany imports 19.4% of natural South African wines and Sweden 10.3%.

Packaged natural wine exports to the UK declined by more than 40% during 2010/11.

“While export figures to the UK are down significantly, the figures we receive from the UK show an upward trend in our market share of wine sales above £5, with growth in value in the on-trade,” says Morgenthal.

He notes that markets such as China and Africa are showing higher export potential.

In total, 118.5-million litres of pack- aged red wine was exported in 2010, along with 65.5-million litres in bulk exports. Exported packaged white wine amounted to 90.5-million litres and 70.5-million litres in bulk.

Morgenthal says that packaged wine is more favourable, as it builds a winery’s brand and image, while enforcing trace- ability and production integrity.

However, bulk wine exports are more environment friendly with a smaller carbon footprint and are also more com- petitive, he adds.