The South African wine industry is gearing up to export more bottled vintages, rather than bulk wine, to take advantage of the windfall of 60 million litres it has been granted to export to the European market annually.
Europe has increased the duty-free quota to 110 million litres from the 50 million litres that South Africa is currently allowed to export every year.
Wine is one of the products covered in the economic partnership agreement between six southern African nations and the EU, which was initialled earlier this week.
“Ideally we would like to see our bottled products grow their market share in the EU,” Kurt Moore, the chief executive of the SA Liquor Brand Owners Association, said.
South Africa’s total wine exports, a combination of packaged and bulk wine, at present amounted to 140 million litres a year, he said. Of these, 75 million litres were bottled.
Moore said an increase in the volume of bottled wines would be beneficial as it would create jobs in packaging.
He said the packaging of the products would result in job creation and higher revenue generation.
“We have to use the quota to the best of our ability because, if we do not use it, it will be reduced. We must aim for increasing this number beyond the 110 million litres,” he said.
Wine was, until recently, South Africa’s biggest agricultural export product in terms of generating foreign exchange.
It was overtaken by citrus fruit shipments, although these have suffered after the imposition of tight controls by the EU because of its concern about black spot disease. The issue came to the fore last week when a consignment of lemons was found to be contaminated.
Despite reports that the harvest of grapes for wine production may fall 4.7 percent this year, from a record crop last year, Moore believes the industry will have the capacity to produce the allowed volumes.
Reports by the US Department of Agriculture’s foreign agriculture service suggest that farmers would probably produce 1.42 million tons this season compared with last year’s harvest of 1.49 million tons.
The report added that the country might bottle about 1.1 billion litres of wine this year, less than the 1.2 billion litres packaged last year.
South Africa was the eighth-largest wine producer in 2012, accounting for 4 percent of global output, according to the SA Wine Industry Information and Systems.
“We certainly have the capacity to grow our market share,” Moore said.
However, this would not happen automatically and not just because the industry now had an increased quota of zero tariff wine. “The industry would have to plough the reduction in the tariff into marketing their wines in order to grow market share,” he said.