Western Cape Business News

Send  Share  RSS  Twitter  19 Aug 2010

BEVERAGES: Wine Cups Runneth Over


Recent Western Cape Business News

LIKE many sectors of the economy, the wine industry is set to capitalise on the benefit from the recent World Cup.

According to Danie de Wet, owner of the De Wetshof Estate near Robertson and former KWV chairman, the successful event offers the wine industry the biggest opportunity to establish itself as a prominent wine nation in the eyes of the world since the release of Nelson Mandela in 1990. The latter event led, among others, to the lifting of economic sanctions and opened international markets to South African wine and other products.

The image of our wine is inextricably linked to the holistic image of South Africa,” says De Wet. “The excellent organisation of the tournament has exceeded the world’s expectations.

The smooth running of the event coupled with the country’s natural beauty and hospitable people, as well as worldwide positive publicity, has made South Africa a remarkable trademark that no money can buy.”

And according to De Wet, this is precisely the injection the country needs to expand on its reputation as an outstanding, world-class wine producing nation.

There are two main advantages our wine industry can draw from this positive international image,” says De Wet. “Firstly, it means that no longer will international wine consumers have an excuse of passing a shelf of South African wine labels and – as so often has been the case – not have the faintest idea where the country is even situated or what status it enjoys. Everyone now knows where South Africa lies and that it is a unique country with remarkable people and natural resources, as well as organisational abilities and business acumen.”

This particularly underscores opportunities for our wine industry in countries such as China, India and South America where the consumption of wine is on the increase while knowledge of the product and various wine cultures still lags. The country’s current presence in the international limelight offers our agricultural products greater exposure.”

De Wet says the second advantage to be gained from its raised profile is something the local industry desperately needs: international buyers and consumers willing to pay realistic prices for South African wine.

Regardless of our wine industry having being technologically on par with wine countries in the so-called First World for decades, some foreign buyers persist in stigmatising SA as a producer of cheap wine,” says De Wet.

While wine exports are increasing by volume, they have not done so in value because we allow wine wholesalers overseas to buy our wines cheaply and then to re-sell at those price levels. This has led to the image of a country with too many wines of the ‘cheap and cheerful’ variety.” Sales of De Wetshof wines for June were 40% higher than the same period last year, which can largely be attributed to the increased number of visitors, he points out.

According to Wines of South Africa CEO Su Birch, for the most part there has been a marked increase in sales volumes amongst those countries with a high level of interest in soccer.

For the six months to the end of June, the volumes of packaged wines exported to Germany rose by an impressive 50%. To the US, which interestingly bought more tickets to attend the games than any other foreign country, exports increased 32% for the period. Canada, Finland and Belgium all showed double-digit volume growth. So did the Republic of Ireland, a country particularly hard hit by the downturn.

Other promising developments have been a 33% growth to Japan, and a more than doubling of sales to both the United Arab Emirates (UAE) and China, albeit off a smaller base. Even to competitor countries such as France, New Zealand and Australia, sales were up.”

Birch says the impact of the games has not only been confined to sales abroad. Some producers reported excellent domestic sales too. Vinimark, the country’s largest independent specialty wine wholesaler, representing many leading names in local wine, had reported double-digit growth in sales directed to the local hospitality sector, when compared with the same period a year ago. This was at a time when the industry worldwide had seen a significant fall-off in sales through licensed establishments. Groot Constantia’s sales had risen by 10% in June this year, compared with June 2009, and the trend for July was looking even better for the historic estate. Similarly, Warwick Estate in Stellenbosch had experienced a 58% increase in domestic sales in June.

Warwick’s Mike Ratcliffe says whereas last year exports accounted for 60% of sales during June and July, and the domestic market 40%, the ratios have been reversed this year with the strong influx of soccer-related visitors to the Cape.

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