EU deal gives boost to South African wine industry

SOUTH AFRICA – South Africa’s wine industry has received a major boost with the signing of an agreement between the Southern African Customs Union (SACU) and the EU which will allow the country to export 110-million litres of wine to Europe — up from the current annual duty-free quota of 48-million litres.

Although SA exports worldwide, the EU is by far the wine industry’s biggest export destination, accounting for close to 75 % of annual off-shore sales volumes, worth R5bn.

SA’s nearly 100,000ha of vineyards, mostly situated in the Western Cape near the coast, generate about 3% of the world’s wine production.

Michael Mokhoro, the stakeholder relationship manager for SA’s wine and brandy industries, on Friday said the economic partnership agreement needed to be ratified before the end of September, in order to take effect from October 2016.

He said each of the SACU countries — SA, Namibia, Lesotho, Swaziland and Botswana — would first have to individually ratify the agreement through their respective Parliamentary processes.

The EU Parliament would ratify the deal on behalf of its 28 member states.

Assuming that this went ahead as scheduled, the duty-free quota for the remainder of 2016, would be allocated on a pro rata basis, Mokhoro explained.

Sparkling wine did not form part of the duty free quota under the economic partnership agreement, as it already qualified as duty free under the trade, development and cooperation agreement treaty previously concluded between SA and the EU.

Mokhoro said that in the interests of promoting SA’s wine reputation and the sustainability of its exports, initially 70% of the 110-million litre quota would be directed to packaged wines, which were those in bottles or other containers of 2 litres or less.

Thereafter, it was likely that the packaged quotient of the allocation would be further increased.

He added that the economic partnership agreement offered a much-needed boost for the industry that had been besieged by drought and a tough global climate. Wine producers in the Western Cape are facing a harsh season due to drought and heat.

Early indications are that the harvest will be smaller this year, although VinPro the wine producers’ body predicts a higher quality.

“We hope to see winemakers capitalise on this (the economic partnership agreement) opportunity to build Brand South Africa, as well as the reputation of their own brands.

The deal offers an additional springboard for growing our credentials for excellence of quality and originality,” said Mokhoro.

June 12, 2016; http://www.bdlive.co.za/business/trade/2016/06/12/agreement-with-eu-a-major-boost-for-south-african-wine-industry

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