South Africa calls for bulk wine withdrawal to ‘create value at origin’

By Ben BOUCKLEY contact

- Last updated on GMT

South African wine...in bottles! (Photo: Mike/Flickr)
South African wine...in bottles! (Photo: Mike/Flickr)

Related tags: South african wine, International trade, Wine

The South African wine industry is keen to raise the country’s reputation as a premium wine producer by shifting its export emphasis from bulk to bottled.

Origin Wines is one of South Africa’s largest exports, and MD Neville Carew is leading the campaign to bottle locally. He blames the global supermarket trade’s drive to cut costs for the rise in bulk exports that has put pressure on producing countries – South Africa now exports more bulk than bottled wine.

62% of the 303m liters of wine shipped to the EU in 2014 was shipped in bulk then bottled locally, with the remainder filled locally in either bottles or bag-in-box. However, in the 2000s bulk exports to the EU only accounted for around 26% of the total.

New campaign follows key EU trade deal

The new campaign follows the recent signing of the Economic Partnership Agreement (EPA) with the EU that takes effect from 2016, when South Africa’s duty-free quota for wines exported to the bloc will more than double to 110m liters.

The deal was big news for South Africa’s wine industry, since the EU is the country’s biggest export partner, accounting for 72% of wine exports in 2014.

Carew said the EPA would enable producers to bottle locally and export at less than the current cost of exporting in bulk to bottle in the EU.

He added that the ‘bias’ towards bulk hit industry earnings (if the percentage of bottled wine exports had remained at previous high levels) by R 1.9bn in 2014 alone, according to South African Wine Industry Information & Systems (SAWIS) calculations.

‘Bottling locally – remaining cost competitive’

For every additional 10m liters of wine bottled in 2016, Carew predicted an addition R200m in direct income for South Africa’s Winelands – industry has set a 2016 target of at least R550m in additional revenue.

"With the EPA operative from next year, we have the chance to bottle locally and still remain cost-competitive, while protecting margins and the reputation of our individual brands as well as of Brand South Africa. As importantly, we shall be creating new jobs,"​ Carew said.

He added that bringing bottling home, so to speak, would drive economies of scale and cut throughput costs for existing South African wine bottlers, and create jobs locally.

South Africa will launch its local bottling campaign ‘Creating Value at Origin’ at a seminar at the London Wine Fair in May, as part of the build-up to Cape Wine 2015 in Cape Town this September.

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