New central body for SA wine industry announced

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Vinpro foresees a lot of consolidation in the wine industry due to challenges like rising input costs.
Vinpro foresees a lot of consolidation in the wine industry due to challenges like rising input costs.
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  • A new central body is being formed for the SA wine industry.
  • It will be called SA Wine NPC and represent the interests of both producers and trade.
  • According to the managing director of wine producers' body Vinpro, the central body should be in place by June this year.
  • For more financial news, go to the News24 Business front page.

If all goes according to plan, the South African wine industry could have a new central body - SA Wine NPC - representing producer and trade interests, by June this year.

This comes amid concerns over fragmentation within the industry, as farms continue to face declining profitability.  

The announcement was made on Thursday by Rico Basson, managing director of Vinpro, which represents close to 2 600 South African wine producers, cellars and industry stakeholders.

"We want to consolidate the various wine industry bodies. Together they are funded by millions of rand a year through various levies, but are all of them still relevant?" Basson said at the annual Vinpro Information Day.

"Currently we play a bit all over the show and that does not give the industry the efficiency needed from speaking in one voice to enable growth, development and innovation. We believe a central body will provide a central point of accountability and a single narrative due to greater coordination, speed and agility in optimising our resources."

The industry bodies SA Wine Industry Information and Systems (Sawis) and Wines of South Africa (WoSA), which promote the exports of SA wine, will not be incorporated under the new central body, but joined via contracts.

"There seems [to be] consensus and happiness that this is the right way forward," said Basson.

Vinpro chair Anton Smuts echoed the need for the wine industry to have one strategy and united action.

"In reality, we have a failed state where there are too many promises and little being done about it. Fragmentation and a lack of focus negatively impacts productivity. But together we can enable the SA wine industry to grow on a level playing field," said Smuts.

Basson foresees a lot of consolidation in the wine industry due to challenges like rising input costs. This is because profitability continues to decline at farm level.

Vinpro research shows that 9% of wine producers are sustainable, make profits, and can replant. About 50% make low profits, 3% reach breakeven, and 38% are making a loss. The average return on investment for wine producers in 2022 was just 2.4% compared to Vinpro's goal of between 8% and 10%.

On a more positive note, he says the huge surplus volumes experienced during the pandemic, causing pricing to basically just more sideways. This is starting to trend back to equilibrium between supply and demand. This could create an upward trend in prices in the short to medium term.

"We expect average bulk wine prices to increase by 8% to 10% in nominal terms in 2023/24. Wine accounts for only 14% of total legal alcohol consumption in SA, compared to beer at 56%.

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