FOOD & BEVERAGES: Wine Exports Hurt By dti
Recent Western Cape Business News
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 is not helping the local wine sector. “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,” says WOSA CEO Su Birch.
Without access to government funding, WOSA’s investment in the US market remained at R3.5 million (about US$350 000) per annum. In contrast, Chile’s generic spend had reached US$6 million and Australia’s, US$25 million, 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 dropped from about one 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, Birch says.
When almost 100 wine producer representatives met last month to discuss the parameters for the formation of the USA Producers Association (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,” says Birch.
“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 says the complexity of the US market with its three-tier structure and differing individual state legislative requirements have proved problematic for South Africa to date. This has 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.
USAPA hopes 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 will operate independently of WOSA, the two bodies will collaborate closely to maximise their efforts.
Given its financial constraints, WOSA has to date directed its efforts to those markets where it can 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,” she says.
According to the International Wine & Spirit Record in its research commissioned by Vinexpo and released earlier last 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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