EXPORTS: New Wine to USA Initiative
Recent Western Cape Business News
WOSA CEO Su Birch said her organisation was fully behind the newly formed USA Producers’ Association (USAPA), which held its first public meeting in Stellenbosch this week.
“We are unreservedly in support of USAPA’s efforts to build a South African presence in the US market, set to become the biggest wine importer by 2012. We believe our mutual co-operation will help considerably to augment the impact of the South African wine category in this exciting market.”
She said the complexity of the US market with its three-tier structure and differing individual state legislative requirements had proved problematic for South Africa to date. This had been compounded by the lack of exposure on the part of most Americans to South Africa as a wine-producing nation. At the same time, competition from other producing countries had intensified in this market.
Birch added that the decision by the Department of Trade and Industries (dti) to shift its export focus away from developed countries because of the global credit crunch was not helping. “The US remains the fastest-growing wine market by value. It is thus a shame that the dti has not factored the special characteristics of world wine economics into its strategy.”
Without access to government funding, WOSA’s investment in the US market had remained at R3,5m (about US$350 000) per annum. In contrast, Chile’s generic spend had reached US$6m and Australia’s, US$25m, thanks to the support from their governments.
As a result, despite the continued growth in consumption of wine by Americans, South Africa’s exports of packaged wines to the US had dropped from about 1 million nine-litre cases two years ago, to some 760 000 cases in 2008, in sharp contrast to South Africa’s stellar performance in other markets.
When almost 100 wine producer representatives met on January 20 to discuss the parameters for the formation of USAPA, there was a majority agreement to co-operate with WOSA. “With the growing number of positive reviews achieved by the country’s specialty producers in highly influential US wine publications, any additional resources that can be targeted at this market will certainly help to build the South African category as a producer of excellent quality and value,” said Birch.
USAPA hoped in its first year of operation to raise US$500 000 in funds through membership fees and a percentage of FOB revenue generated by producers in the US. Although it would operate independently of WOSA, the two bodies would collaborate closely to maximise their efforts.
Given its financial constraints, said Birch, to date WOSA had directed its efforts to those markets where it could achieve success on extremely tight budgets. “However, while South Africa was now the leading New World supplier to Germany, the Netherlands and Sweden, the country does need to make a concerted effort to realise the potential of the US market.”
According to the International Wine & Spirit Record in its research commissioned by Vinexpo and released earlier this month, US consumers will buy a total of nearly 314 million cases of wine in 2012, an estimated increase of close on 9% on 2008.
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