It's not a deliberate attempt to outprice foreign wines SHOCK 4000% increase in premium champagne prices.
This type of headline has recently emblazoned finance section pages in the newspapers.
It followed government's moves to introduce new duties on wine imports, but was met by screams of protest from the well-heeled amongst the country's community.
French restaurateurs and local suppliers of select wines were immediately up-in-arms about the massive duty hikes on the upper-end of the wine market - with claims, for example, that top-of-the-range champagne labels like Dom Perignon, Krug and Cristal would be priced off the market. Emotions ran high, with one French restaurateur reported to be threatening a European reaction against SA and counter-tax barriers being placed on SA wines as a form of European revenge.
It was also suggested that the new tariffs were protectionist and narrow-minded and were protecting local producers, but hammering quality wines that are just not made here.
However, the intent behind the new duty structure does not appear to be a deliberate attempt by government to price exclusive, foreign wine vintages off the tables of SA wine-lovers. Rather, it is an accidental off-shoot of SA's attempts to bring its whole import regime under the conditions laid-down in the World Trade Organisation (WTO) Uruguay Round of multilateral trade negotiations - completed three years ago. In this, the SA government obliged itself to a gradual shift from non-tariff trade barriers - of which SA's import controls related to wine was one - into a system of tariffs. Greater transparency, predictability and efficiency is expected to be the result of the change.
But top-of-the-range wines have suffered in the newly introduced tariff structure - printed in Government Gazette No R 46 of January 7.
In this, the section related to spirits - like whisky, rum, gin and geneva, vodka and liqueurs and cordials - actually displayed a marginal drop in the rate of duty. But, fitting into the duty ranges suggested by the WTO for such products, wine showed increases in rates of duty almost all the way up the range - although the lower-priced articles suffered less.
However, a change in how the import duty is assessed has had an unfortunate effect on expensive wines. Previously, all sparkling wines (in which the Dom Perignons etc fall) were rated at an import duty of 41,79 cents per litre, and unfortified wines at 31c. But now they fall under a flat 25% rate of duty. This is calculated against the value of the wines declared for customs valuation. For the cheap end of the ranges, duty increases are not so worrying, but for the wines coming in at R100+ a bottle, the duty increase is, indeed, shocking. A litre of one of the classics could be faced with an increase in duty of anything up to 6 000% - or a landed cost increase of as much as R25 a bottle.
But the hope for the future, according to observers of the trade, is that - again in accordance with the WTO's aspirations for liberalisation of trade - the tariffs might, in time be whittled away considerably.