Western Cape Business 2017 edition

OVERVIEW Wine and grapes

OVERVIEW Wine and grapes China is importing the fruits of the Western Cape’s vineyards. SECTOR INSIGHT Nearly 50 000 people work in the province’s table grape sector. • A Cape wine farm is selling exclusively to China. • KWV has been sold to a global company. Chinese consumers love the grapes of the Western Cape, whether they are presented to them in bunches or in bottles. Alterations to importation regulations are set to massively boost table grape sales to China, and wine farmers are selling ever-increasingly volumes to that country. Table grapes South Africa’s table grape producers and exporters had something to cheer about in 2016. Because China has changed its cold-treatment protocol, South Africa can now increase its exports to that country to R2.5-billion within five years. In 2015, 10 600 tons of table grapes were sold into China but the figure could not be increased because of the cold-treatment protocol relating to the South Africa product, which affected quality, market share and price. The Chinese market for table grapes has been growing at 30% since 2000 and stands at about 0-million. The South African Table Grape Industry Partnership (SATI) is a partnership whose board membership represents every growing region. The industry’s contribution to the national GDP is estimated at more than R3-billion. The table grape industry provided over 46 000 direct jobs to the Western Cape during the 2015/16 harvest. The Western Cape is responsible for 65% of total production volumes in table grapes. There is also a significant contribution to downstream production income – R3.2-billion to other product-input providers, R720-million to packaging material suppliers and R250-million to logistics suppliers. On farms with black ownership, income of R183-million was generated in 2014/15. Key industry figures for the annual national harvest: • More than 85 000 jobs WESTERN CAPE BUSINESS 2017 78

OVERVIEW • Wages valued at R950-million • Additional R600-million job creation by suppliers in the value chain Three of South Africa’s grapegrowing regions are located in the Western Cape: • Olifants River: The river flows from the Cederburg Mountains westwards towards the Atlantic Ocean via Namaqualand. • Berg River: The Du Toitskloof Mountains are the main geographical feature of this region named for the strong-running river that irrigates the fields of grape varieties such as Red Globe, La Rochelle and Bonheur. • Hex River: The river runs past the Matroosberg where snow falls are a regular occurrence. Popular varieties are La Rochelle, Sunred Seedless and Barlinka. Wine A bottle-making factory in Gauteng is doubling its capacity because Cape wine exports are rising so quickly. Exports from the Western Cape reached R8.6-billion in 2015. Nampak told Business Day in 2016 that the main factor in increased orders from its Cape wine buyers was the Economic Partnership with the European Union, allowing easier access into the EU for Southern African goods. Total exports of wine out of the Cape have grown from 50-million litres to close to 450-million, with many of the new sales going to China. The Chinese market was valued at R240-billion in 2015 (IWSR) and a joint venture between Leopard’s Leap and Yangzhou Perfect (51%) has bought the wine farm Val de Vie to make wine to export to that country. The wine is branded L’Huguenot. There is a move to try to shift South Africa’s focus away from bulk wine sales, to bottled wines. The website beveragedaily.com quoted the managing director of Origin Wines stating that for every 10-million litres of additional wine bottled in South Africa in 2016, additional direct income of R200-million should accrue to the Cape Winelands. The decision by Britain’s electorate to extract the country from the EU will lead to some complications, but Western Cape Minister for Economic Opportunities Alan Winde believes that the new situation could lead to many new opportunities. The EU may push for the reduction in some of the figures set for imports (on the basis that a chunk of the allocation would have been going to Britain), but Britain will surely want to negotiate a good deal with South Africa as quickly as possible. There are over 3 500 wine producers in South Africa, with the large majority located in the Western Cape. Wine is produced by estates, independent cellars and producer cellars or co-operatives. The Distell group runs five distilleries and seven wineries in the Western Cape, produces about a third of the country’s natural and sparkling wine and is ranked 12th in the world in terms of global wine volume sales. The multi-brand KWV was sold in 2016 to consumer investment group Vasari. The reported sale price was R1.15-billion. Niveus, the previous owner of KWV, retains the company headquarters building in Paarl (La Concorde) and the Laborie wine estate. Wellington Wines is a new venture that arose from the merger of the Wellington Co-operative and the Wamakersvallei Co-operative. DGB is a large wine and spirits company that makes much of its own product at five famous wineries. These include Boschendal, Bellingham and Douglas Green. Edward Snell & Co is a wine and spirits wholesaler that also makes its own line of spirits. Fourteen brandy distilleries can be visited on the Western Cape Brandy Route and a further six on the R62 Brandy Route on the road east. ONLINE RESOURCES Integrated Production of Wine: www.ipw.co.za National Agricultural Marketing Council: www.namc.co.za Nietvoorbij Institute for Viticulture and Oenology: www.arc.agric.za SA Wine Industry Information & Systems: www.sawis.co.za South African Brandy Foundation: www.sabrandy.co.za South African Table Grape Industry: www.satgi.co.za Western Cape Department of Agriculture: www.elsenburg.com Wines of South Africa: www.wosa.co.za 79 WESTERN CAPE BUSINESS 2017