... as EU agreement takes effect
Ray Smuts
LAST week's affirmation of the EU/SA Wines and Spirits Agreement is regarded as a victory for the wine industry but a warning has been sounded at the same time that the playing field has by no means been levelled.
Signed at Paarl's historic Nederburg, the agreement gives Cape wine farmers the go-ahead to export 42 million litres of wine duty-free to the 15 EU countries annually, up from 32 million litres previously. (About 78% of South Africa's total wine exports of 157 million litres goes to the EU).
Also part of the agreement, backdated to January 1, will be the eventual phasing out of names such as ouzo, port. sherry and grappa while the EU will contribute Euro 15 million (about R150 million) for the restructuring of the wine industry, allocations to be decided on by the government.
Alistair Ruiters, director-general of the Department of Trade and Industry, says the additonal quota will contribute more than R40 million annually to wine producers.
SU Birch of Wines of South Africa has urged all exporters to apply to the Department of Agriculture for duty-free export permits and implored that they not use duty-free benefits to discount local wines, thereby tarnishing the steadily improving image South Africa is building as an exporter of merit and value.
Of the 42 million litres of bottled wine to be exported duty-free, the Department of Agriculture is allocating 80% to what it terms "historical exporters" - those producers who have been exporting for at least three years.
In accordance with the agreement, exporters will still be required to pay the excise on the bottled wines they sell to the EU.
Says Birch: "While the duty-free quotas will allow producers some manoeuvrability in terms of pricing, they should not trade on the back of the weak rand.
"The power of the major retail chains in Europe is strengthening, some countries' retailers accounting for as much as 80% of total sales, and they will try to use the weak rand to drive prices down even further, particularly as they already operate in a market that favours buyers over suppliers."
