The decision of UK retailers to switch to bulk wine imports rather than bottled wine is a “serious threat” to the South African wine industry, Department of Trade and Industry agroprocessing industrial development division chief Stephan Hanival said on Wednesday.
“We are led to believe that the UK retailers would like to import wine from South Africa in bulk as it is slightly cheaper and allows them to bottle it themselves adding value to the UK economy. Currently, we believe that 300 to 700 South African jobs have been lost through bottling plants closing down, pointing to significant risks for the wine industry stemming from this approach,” he said.
“We are also concerned that this approach might spread to other sectors of the economy, such as the fruit juice sector and South Africa’s other beverage sectors,” Hanival added.
In the 2011/12 period 52% of South Africa’s certified wine was exported in bulk compared to 35% in 2006, he said at a post-Cabinet briefing.
To reduce the impact of the bulk exports, Cabinet has taken the decision to embark on a wide range of interventions.
These include a process to develop a five-year industry strategy to assist in placing the industry on a sustainable growth trajectory, a programme to reduce the environmental costs of producing wine in South Africa and a consumer awareness programme to improve consumers’ understanding of holistic environmental indicators, Cabinet spokesperson Jimmy Manyi said.
Other steps include in-depth cross-sectoral research and analysis of the wine value chain, engagement with the wine and packaging industries to develop innovative, sustainable packaging solutions, as well as initiatives to assist the industry to accelerate export market diversification.
“We have to ensure that our wine export sector does not remain concentrated in the UK market, but start looking at other fast-growing markets such as China,” Hanival added.
Cabinet also announced a study on the possibility of bulk whisky imports from the UK.
Hanival stated that in 2011, South Africa imported about R1.7-billion worth of whisky from the UK, while at the same time exporting about R933-million worth of wine.
“There is a significant imbalance between these beverage imports and exports between South Africa and the UK and we believe that we would need to begin engagement with the UK government as well as retailers and whisky producers about the possibility of importing bulk whisky,” Hanival proposed.