A government minister in South Africa's Western Cape has rebutted a top civil servant's claim that shipping bulk wine to Europe poses a “serious risk” to the country's industry.
In August, it emerged that the South African government was considering retaliatory measures over job losses caused by British retailers moving to buying wine in bulk rather than in bottle. At the time, Stephen Hanival, chief director for agro-processing at the Department of Trade and Industry, declared: “South Africa does have a responsibility to protect its trade interests. Our view is that this is a serious risk to the South African wine industry.”
While bulk wine exports have increased from approximately 30 percent by volume a decade ago to 50 percent today, leading to the loss of jobs at local bottling plants, they are a reality of the modern industry.
The trend towards bulk wine is also a feature of today’s retail market and most New World countries now export around 50 percent of their wine in bulk, compared to 20 percent in 2001, according to a Rabobank report. Without bulk shipping, South Africa would almost certainly lose orders to other wine-producing regions, such as Chile and Australia.
The Western Cape's minister for agriculture and rural development, Gerrit Van Rensburg, told Wine-Searcher that if customers wanted to order wine in bulk, this was better than ordering no wine at all.
“If there's a market for bulk wine, we must make bulk wine," he declared. "But I prefer to export it in bottle because it is normally the better quality of wine."
Van Rensburg, a farmer himself, said, “We have had a lot of job losses at bottling plants and that was the reason for the discussion." He stressed that his main aim was for the Western Cape "to produce wine to have jobs on the farm and in the winery."
Jobs are in short supply in South Africa, where the unemployment rate sits at around 25 percent. The wine industry employs 275,600 people directly and indirectly. But it loses about 107 jobs for every 10 million liters of bulk wine exported, according to a three-year study by Wines of South Africa (WoSA). As a result, the trend towards bulk sales has become a hot political topic.
While trying to save jobs, WoSA chief executive Su Birch backs the provincial minister’s approach to bulk bottling. “The wine industry recognizes that shipping in bulk is here to stay for certain sectors of the market and nothing the government says will change that,” she told Wine-Searcher. "The supermarkets will simply go elsewhere for their wine if our government upsets them! And then we will lose jobs on farms as well."
Birch added: “As our government traditionally has done very little to support the wine industry, we are pleased they are showing some interest and offering to help. If they do that by helping us grow into other markets [where] we can sell more value-added wine, then that is great news indeed.”
Gary Jordan, a wine producer in Stellenbosch, does not ship in bulk, but says he understands why others do: "Often the government makes more from a bottle of wine than the farmer.”
Indeed, the state gets more money from wine than the producers who make it. Official figures show the South African government made 4,204 million rand ($503 million) from wine last year, while producers received 3,594 million rand ($430 million). In the past decade, in fact, the growth in state revenue derived from wine has consistently outstripped the increase in producers’ earnings.
Jordan says prohibitive glass prices are another factor hitting the South African wine industry. “It costs us more to bottle a wine here than in any other country, because we are so isolated. There's no economy of scale. We have two companies that make glass, and so costs are high.”