Sunday Times Agriculture PR
Banking On The SA Wine Sector
As one of the leading funders of agriculture projects in South Africa, Absa has a real affinity for the wine industry and the opportunities that it presents not only locally, but also for the export market.
Employing nearly 270 000 people – either directly or indirectly – the South African wine sector is not only a meaningful contributor to the employment landscape, but also an industry which can compete with the best in the world.
In 2021, 388 million litres of wine were exported despite the impact of COVID-19 still being felt across the value chain. A further recovery in 2022 should make a meaningful contribution to the sector.
Despite this rosy outlook, there are certain challenges which have been identified by local industry stakeholders and it is important that we continue to identify tools to mitigate some of the risk.
With inflation figures recently released and indicating that inflation is at a 13-year high of 7.8%, this is likely to put pressure on the pricing of South African produce both locally and internationally. On top of this, there is a growing illicit wine market which is undermining the integrity of the local industry –something which needs to be addressed to ensure the best products come to market.
A third challenge is a hangover from COVID-19 where glass shortages were impacting various industries, including the wine sector. While capacity is steadily coming back online, intermittent power issues and supply chains impacted by the events in Ukraine are not helping.
The fourth challenge – and this is something that impacts the broader agriculture sector as a whole – is investment in our logistics and ports infrastructure. It won’t help if we deliver a world-class product but cannot move it abroad. The ability to supply on time to ensure we occupy retail shelf space abroad is very important to ensure a sustainable industry – given the unrest, floods and infrastructure challenges this was not always possible in recent times.
While the industry faces very real challenges, there are also very real opportunities.
The first opportunity is the sheer diversity of the South African wine sector which encompasses a variety of different wine products – natural, fortified and sparkling – but also wine for brandy purposes. More recently there has been a spike in the use of grapes for grape juice and grape juice concentrates. In addition, new regulations also allow grape juice to be used in cider, creating new opportunities.
The second is the growing African wine market. While the United Kingdom, Germany, Italy, the United States, and the Netherlands are big export markets for local vineyards, the likes of Namibia, Botswana and Tanzania are representing very real growth opportunities.
The third is wine tourism, an area which delivers multiple benefits for the country as the tourism sector begins to expand again. We have stunning wine farms, particularly in the Western Cape. These are destinations of choice for local and international tourists. While the tourism sector is hamstrung by some challenges around airline capacity, we should focus investment to make it as easy as possible for tourists.
Lastly, the wine sector ties in very nicely with many of the Sustainable Development Goals (SDGs) as well as Environmental, Social and Governance (ESG) objectives for organisations. This includes job creation, water conservation and opportunities to bring women into the economy. Through responsible development of the sector, we can position vineyards as transformative economic hubs.
What is particularly important here is feedback from industry stakeholders that a very constructive dialogue is taking place as a result of engagement between government, labour, civil society, funders and the private sector industry participants. This is an excellent departure point for identifying growth opportunities.
Absa sees the wine sector as incredibly important in the broader agriculture economy and we look forward to working with entrepreneurs who are passionate about seeing this sector grow in 2022/23.
In addition, as the biggest financier of agriculture in South Africa and with over 100 years of experience, Absa is proud of our longstanding relationship with the Pinotage Association. Absa has been the sponsor of the South African Pinotage Assocation since inception 25 years ago. Pinotage is a national asset and has truly become a symbol of excellence and growth in South African agriculture. Our support for this signature South African varietal is a tangible demonstration of our African heartbeat.
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