Wine exporters pull together to swell marketing funds

Ray Smuts SOUTH AFRICAN wine exporters have agreed to work together to ensure that benefits of the EU duty-free concession flow to the industry as a whole. This follows the SA Government's signing in January this year of an EU deal which allows the country to export (to EU countries) 42 million litres of bottled wine free of customs duty - a quota set to escalate by 3% a year. The real need is to improve the profitability of the local wine industry However, Wines of South Africa CEO Su Birch says the way in which the customs duty exemption is currently structured does not benefit the wine industry, its producers or its workers. "The tax exemption is realised in the EU by the importer who is either the South African exporter's agent or the retailer. There is a real risk that this exemption could result in the savings from the duty merely contributing to the improved profitablity of importers or retailers which was not the intention behind the agreement." Birch asserts the real need is to improve the profitability of the local wine industry which is having to transform itself in order to remain globally competitive. This due to dramatic increases in volumes produced by other New World countries. The major players in the local industry, all of whom are represented on the WOSA board and who represent 85% of all bottled exports from South Africa, have contractually agreed between each other to pay the value of the duty-free concession into a fund. These monies, amounting to five times' WOSA's existing budget, will enable the organisation to embark on an agreed-upon five year marketing plan, part of which will involve importers advising on strategy development. What is notable, affirms Birch, is that most of the major players in the South African wine exports stakes are now pulling together.