SA wine industry urged to focus on higher value products


The South African wine industry should put more focus on supplying higher value products both locally and internationally, according to Anton Smuts, chairperson of Vinpro.

Vinpro is a non-profit company which represents 3 500 South African wine producers, cellars and industry stakeholders.

At the annual Nedbank Vinpro Information Day in Cape Town on Thursday Smuts cautioned, however, against over pricing on quality provided. In his view, this would have a negative impact on brand SA's international wine image.

"We must adapt to be globally competitive and profitable, to learn continuously to fit into the competition landscape," said Smuts. "We still make too many uninformed decisions, because we are not aware of tendencies which could be positive for us."

Smuts said profitability is still under pressure in the wine industry, but that there is more of an understanding between producers and those operating in the value chain.

Furthermore, wine producing areas in the Northern Cape and Little Karoo are still suffering due to the impact of the drought.

Rico Basson, managing director of Vinpro, pointed out that the SA wine industry is still one of the biggest export industries in the country.

He said a global survey found that the biggest challenges in the wine industry – and this would apply to SA as well – are health policies encroaching on the industry (for instance bans on advertising); the global economic downturn; climate change; low profitability; trade wars; and competition from other products.

"We are in to become a structurally lower volume industry. We are only 4% of the global wine industry and on the production side we are seeing erratic production due to climate change," he said.

"We would have to change the shape of consumer demand to grow value and 'premiumise'. This will take time. Last year we sold 10 million fewer bottles of wine in SA," he said.

"We also have to continue to 'premiumise' internationally. This will take time. There also should be some more consolidation of businesses in the local industry and we have to include transformation as a focus as well."

In Basson's view, the local wine industry should aim to be an export-orientated one and, in his view, this can be done if everyone works together.

"We have to balance the price expectation with the value offering, though. The price cannot just go up and up," he cautioned.

Nedbank economist Isaac Matshego said load shedding is hurting the agricultural sector, a sector which is one of the top-3 job creators in the country.

"So, it is imperative that we stabilise Eskom. Coal supply contracts have to be investigated and hopefully there are clauses in those contracts to give government the power to terminate them," said Matshego.

"We most of all want to see prosecutions and we still don't know the full extent of the mess at SOEs. It is probably worse than what we know so far."

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