“The current stock levels indicate that there is wine somewhere which should have been on the market already, and meanwhile the new wines are already in the process of being made.”

So said VinPro chairman, Abrie Botha, at a particularly successful information meeting for industry leaders which was held in KWV’s Kohler Hall in Worcester at the onset of the producer organisation’s second year of business.

The meeting was addressed by various specialists and key figures from industry ranks, who also represented the SAWB, Wine Cellars South Africa (WCSA), Sawis and the Bureau for Economic Research (BER) at Stellenbosch University.

Mr Botha warned against ‘dumping’ and the subsequent rapid decrease in the wine price. “The wine must be supplied to the market in a responsible manner,” he said to those present, about 80 members of the industry. “As promised we held discussions with the wholesalers two months ago about the issue of stock levels.”

He also referred to a proposal by Paiter Botha of VinPro’s Information Service which stated that the “transferred stock” to the end of last year had increased by approximately130 million litres, mainly for the following three reasons:

  • In 2003 99 million litres were imported.
  • A decrease in domestic sales of lower price class wines.
  • An unexpectedly large crop.
  • Current estimates show that despite the expected healthy growth in total sales this stock will have increased by a further 30 million litres by the end of 2004 due to another large expected crop.

“We suspect that some cellars still have contracted wine. However the wholesalers cannot be expected to buy it at prices that are unrealistically high while it can be imported for less.

“An intelligent approach is required to address these and other industry risks and in this matter we can count on VinPro’s industry strategic Information Service. VinPro is represented on various boards of directors and committees, inter alia Sawis and Winetech which resort under the umbrella structure of the SAWB, as well as other industry committees, which gives us extensive access to information.”

Central actions in this regard will be the implementation of a new Cellar Plan and the execution of the Technology Transfer project, the latter which was contracted to VinPro by Winetech, as well as the management of the Communication Forums in collaboration with WCSA.

“What is more, we shall work together as far as possible for the benefit of the producer, also at SAWB level. Collaboration will take place, for example, with regard to the following industry risks, which may also be seen as political risks:

  • The issue of foil bags and plastic packaging, which is making headlines again. Meanwhile I would like to emphasise that the quality both of the product and the packaging should at all times be of an acceptable standard. At the same time I would like to appeal to you to expose guilty parties – irregularities cause needless damage to our business and our image. The matter of the issuing of new liquor licences that exclude sales in foil bags and plastic will also be taken up with the SAWB.
  • The tot system, which has reared its head again. Dr Johan van Rooyen (SAWB) has already reacted to this in the media. The SAWB, which includes all of us, will work with relevant role players to eradicate this evil.
  • Excise. With just a few days left before the excise increases for the next financial year are finalised, the industry’s representatives on the Wine and Spirits Excise Forum, of which VinPro and WCSA form part, are holding discussions with the delegates from the Treasury about misunderstandings regarding certain aspects that had been agreed upon apropos the determining and phasing in of the excise increase on wine and spirits.
  • The new Liquor Act which has already been approved by Parliament, but not yet proclaimed. The definition of a microproducer remains to be decided, but there are indications that this will apply to unrealistically low volumes.”
  • Shortages on the horizon, despite current large crops – SAWIS forecasts
  • Despite the fact that a large part of this year’s crop will probably not be sold, the long term forecasts show that the domestic demand for red and white wines in all categories will not be satisfied in the latter part of the decade.

This much was revealed by the latest Sawis production and market forecasts to assist the industry with its planning processes for the next five years. This information was recently released in brochure format by Sawis and elucidated at the VinPro information meeting by the project coordinator, Yvette van der Merwe.

She emphasised at the meeting that these forecasts are based on historic figures and averages, and that provision could not be made for exceptions to the rule, such as this year and last year, when the crops were exceptionally large.

This document should be seen as “work in progress” and input from all role players will be most welcome.

According to this model it is estimated that the market demand for red wine will be satisfied in 2004 – 2005, but in 2006 – 2008 red wine for the medium price market will have to be imported in order to satisfy the domestic demand for this wine.

If the demand for white natural wine, rebate, distilling wine and non-alcoholic is taken into account, it shows that the domestic demand for the period 2004 – 2008 will not be satisfied.

Other important forecasts are:

  • Plantings of white varieties will constitute 28,4% – 33,5% of total plantings on average from 2004 – 2008, while red varieties will constitute 66,5% – 71,6%.
  • Uprootings of white varieties will be more than 3 500 hectares per annum throughout from 2004 – 2008, while red varieties will be uprooted at an average of 784 hectares per annum.
  • Red wine available for marketing amounts to approximately 172,2 million litres in 2004, whereafter it will increase by an average of 8% per annum to 234,4 million litres in 2008. Cinsaut is the only red variety that will show a negative average growth.
  • White wine (excluding table grapes) available for marketing amounts to approximately 590,7 million litres in 2004, whereafter it will decrease annually by an average of 4,8% to 485,8 million litres in 2008.
  • The domestic demand for natural wine is expected to decrease by 4,4% in 2004, whereafter it will stabilise.
  • It is estimated that the total export market will increase by 11,5% in 2004 and show the same growth trends in 2005 and 2006, whereafter the growth rate will decline slightly.
  • It is estimated that the demand for rebate, distilling wine and non-alcoholic will amount to 350,7 million gross litres and increase to 355,6 million gross litres in 2008.

‘Role players must unite on tot system’ – SAWB

A joint action will be launched by the industry, organised agriculture and NGOs to stamp out the so-called tot system once and for all in instances where farm workers receive liquor as part of their remuneration.

This will be in addition to various actions that have been undertaken by the wine industry over the years to put an end to alcohol abuse in South Africa, said Dr Johan van Rooyen, chief executive of the South African Wine and Brandy Company (SAWB).

Dr Van Rooyen said the wine industry stands squarely behind any effort to eradicate illegalities and violation in this regard.

“We support any such efforts, not only because of the socio-economic problems caused by these so-called tot systems among rural communities, but also because it hurts the image of the South African wine and agricultural industries.

“It is not acceptable that the entire wine industry has to stand in the dock by implication, seeing that these violations are said to be isolated cases and definitely do not represent the general situation on wine farms. And, as has been reported in the past, remuneration in wine – where it does occur – is not limited to the wine farms. It is therefore unfair to lay the despicable tot system at the door of the entire South African wine industry.”

Dr Van Rooyen’s comment about the possible existence of the tot system followed on several reports in the media in which allegations are made that producers still give wine to their workers as remuneration.

According to him the SAWB, which represents all the sectors of the wine industry, inter alia labour, producers, cellars and trade – is set to unite role players in the industry to tackle the problem jointly. “It is important to realise that this is a socio-economic problem and therefore requires a co-ordinated approach. Simplistic solutions simply do not exist.”

The SAWB will draft a code of honour for the industry, amongst others, which will be monitored by the SAWB and other interest groups. In terms of this code of honour the wine industry will be committed, inter alia, to quality control, environmentally friendly as well as ethical practices, and the tot system certainly does not form part of this.”

The complete 28 page document wil relevant graphs may be obtained from Sawis, +27 (21) 807 5719, fax +27 (21) 807 6002, email yvette@sawis.co.za and it is also available on the website www.sawis.co.za.

The 2004 wine grape harvest is estimated at 1 250 168 tons according to the industry’s latest estimates – practically equal to the 2003 crop. This equals 964,7 million litres, calculated at an average recovery of 772 litres per ton (as on 13 January). Therefore 1,0% more than last year.

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