As the Americans and Chinese continue to exchange blows, their fast-escalating trade spat could work in favour of South Africa’s wine exports to the East. This after China raised tariffs on US wines by 15% in retaliation against the US decision to slap an increase of 25% and 10% respectively on the duties for steel and aluminium earlier this year. According to Siobhan Thompson, Wines of South Africa (WoSA) CEO, South Africa currently has a similar if not larger volume share of the Chinese wine market than the USA. “The trade dispute will make USA wines more expensive to consumers in China and they may then trade over to other countries based on price, which means South Africa could benefit,” she said. “We are, however, cautiously optimistic in this regard. We would still need to continue with a focused marketing strategy in this market in order to create a general awareness of South African wine and its quality.” Already other producers around the world have spotted the opportunity in what is commonly being referred to as a “tit-for-tat” trade dispute. “The Chileans have the advantage of having a free trade agreement with China, which we don’t have, so this opportunity may benefit them more than us, but this is all very speculative at this stage,” said Thompson. Chile has been hard hit following the slashing of the copper price and has said upping wine imports to China is a top priority – especially in view of the possible gap in the market thanks to the US having to fork out more for taxes. “I don’t believe that the gap will be filled by wine from purely one country,” said Thompson. “Instead, I foresee a combination of wine from all popular producing countries. American wine is not the most popular in terms of wine imports to China where it holds approximately 1% market share.” She told FTW that in China the French, Australian, Spanish and Chilean wines already held the largest chunk of market share. Commenting on South African exports to China, she said the official statistics showed the country had moved 18.3 million litres to China in 2017, 9.1 million of which had been packaged. “While our overall production year-on-year is not increasing, we definitely have the ability to supply more wine to China. But this would be to the detriment of volumes sold either locally or in other markets in various formats,” said Thompson.” Our strategy is to grow China and we will continue to focus on this but it will need to be at a high ratio of value growth to volume growth. The industry needs to ensure that we strive to grow rand per litre of our exports in order to keep investing in our people and our vineyards.” She said the country had already seen some good growth in exports over the past four and a half years with 2017 growing a whopping 16%. “However, South Africa is still a minor player with a market share of 1-2% in volume terms. We do need to renew our efforts to promote value growth in addition to continued and sustainable volume growth. In 2017, for the first time we exported more bulk than packaged wine to China,” said Thompson.
INSERT with CAPTION
Our strategy is to grow China but it will need to be at a high ratio of value growth to volume growth. – Siobhan Thompson
