By Sisanda Nkoala
JOHANNESBURG, Feb 5 — South Africa’s wine industry is very healthy and, compared with other new world wine producers such as Chile, is a strong, globally competitive player despite the international economic downturn.
This is the conclusion of the latest macro-economic impact report by Conningarth Economists for the South African Wine Industry Information and Systems. The five-year report covered the period from 2008 to 2013.
A massive growth in wine exports, both bulk and bottled, has played a big role in the industry’s performance.
Bulk exports accounted for 66 per cent of volumes sold outside the country in 2013, but packaged sales continue to strengthen.
The number of litres leaving the country has increased by over 400 million litres over the past 15 years partly as a result of the shortfall in the rest of the world during that period.
The report shows that South Africa is a major international competitor, despite a national vineyard that has decreased slightly.
Rica basson, the chief executive officer of WinPro, the wine producers and cellar member’s organization, WinPro, said: “I think our producers are getting far more efficient and effective, the way we operate, the new plant material so we are getting better with the yields and balancing the quality and I think driven by profitability.”
In 2013, income from wine production increased by 38 per cent, while production costs escalated by 52 per cent. As an industry it remains one of the biggest job creators in the agricultural sector.
The labour to capital ratio and the amount of jobs created for every rand remains high, as Yvette van der Merwe of the South African Wine Industry Information and Systems explained. “That is currently at 4.54 which is very high compared with other industries and is much higher than agriculture as a whole,” she said.
“So that to us is something really very extraordinary to the wine industry and something that is within the whole economic sector because we know how important job creation is and that is absolutely something that we can attribute to.”
According to Professor Nick Vink from the University of Stellenbosch’s Department of Agricultural Economy, there is also a shift in agriculture as a whole towards using more semi-skilled and skilled labour instead of unskilled labour.
“The wine industry is sort of at the forefront. I would argue of that shift and one can see quite strongly just even just over the last five years, one can see these changes and of course not only for the industry, but for the whole country. It’s better to have more highly skilled workers because they earn more and they spend that money and that has a bigger economic impact than when you have lots of people with low wages who can hardly meet subsistence needs.”
The industry contributed 36 billion Rand (about 3.1 billion US dollars) to the economy in 2013 or 1.2 to the national gross domestic product (GDP).
Experts say strengthening of new international markets, advanced technology and breaking into the new middle class in South Africa will see the continued growth of the industry.