When you pour a glass of wine to toast the weekend after what can only be described as a week of United States tariff uncertainty for South Africa, spare a thought for the Western Cape’s wine industry.
Midday Thursday, with only hours remaining before the Trump Administration’s August 1 deadline arrived for possible duty increases of 30% on South African exports, a veil of silence was still drawn over South Africa’s negotiations with the US.
At just after 12 noon on 31 July, it was reported that Trade, Industry and Competition Minister, Parks Tau, was expected to make a statement about the Transformation Fund, and that the opportunity might hopefully be used to say something about the tariffs.
In the meantime, SA Wine has given a breakdown of what the tariffs could mean for South African exports if the tariffs aren’t avoided or at least decreased.
Although wine exports to the US are relatively small compared with the quantity sent to other markets, at least 12 million, out of 306 million litres per annum, go the US.
Last year the value of wine sent to the US was R660 million, a figure that year-on-year has been consistently increasing, illustrating the benefits of heretofore duty-free access and its ultimate gains for market-share growth.
Latest labour figures confirm that about 270 000 people work for some 300 exporting concerns that will be directly affected by ‘Trump tariffs’.
The manager of Stakeholder Engagement and Policy at SA Wine reiterated what many other export entities have said, that developing new markets is not that easy.
He said it couldn’t happen overnight and that exporters risking profit-margin erosion because of increased tariffs, would rather look at expanding existing offset points in the UK, Germany and the Netherlands.
In many instances, vineyards have already been planted and prepared for the projected next harvest’s produce, making it very hard to introduce market adjustments, said Schalk Joubert, chief executive of Pink Valley and Taaibosch wine farms.
He told Netwerk 24 about 20% of their wines go to the US and that it cost millions in industry investment to develop supply lines specifically for the American market.
Let’s hope when you pour that glass of wine on Friday afternoon, it’s to toast common sense prevailing.
