Pretoria - South Africa is looking for a resolution to counter the impact of the decision by United Kingdom retailers to import wine from South Africa in bulk and bottle it in the UK.
Following its fortnightly meeting, Cabinet said it had noted the impact of the UK retailers' decision to switch from importing bottled wine from South Africa, to importing bulk wine which is then bottled in the UK.
Speaking at a media briefing on Wednesday, Chief Director: Agro-processing at Department of Trade and Industry, Stephen Hanival, said South Africa had a long and very strong relationship with the United Kingdom at both the trade and political level.
He hoped the developments around bulk wine exports did not adversely trade between South Africa and the UK or any of the European Union countries with which SA trades.
In the 2011/12 period, 52% of South Africa's certified wine was exported in bulk. In 2006 the number was around 35%.
"There's been a very significant swing in the volume of bulk wine leaving the country," said Hanival.
He added that part of the decision by the UK was due to the work of an NGO (based in the UK), which advocates bulk wine exports from developing countries such as SA, citing environmental concerns.
"It appears as though the NGO has not taken account of the socio economic costs to an economy like SA from exporting wine in bulk. Wine in bulk means that we don't have the value addition in South Africa, we don't have the brand identity associated with South Africa's very high quality wine," explained Hanival.
The decision is likely to affect the development of other ancillary and downstream industries such as the glass bottle industry.
"This is a serious risk to the SA wine industry. We are led to believe that the retailers in the UK would like to import wine from SA in bulk mainly because it's slightly cheaper and allows them to bottle it within their economies and add value in their economies, rather than in a developing country such as South Africa," he added.
To reduce the impact of bulk import, Cabinet approved the development of a process to come up with a five-year Industry Strategy to assist in placing the industry on a sustainable growth trajectory and a programme to reduce the environmental costs of producing wine in South Africa, said Cabinet spokesperson Jimmy Manyi.
Additionally, a consumer awareness programme to improve consumers' understanding of holistic environmental monitoring indicators; an in-depth cross-sectoral research and analysis of the wine value-chain; as well as a study on the impact of possible bulk imports of whisky from the United Kingdom, among other, things has been approved.
"We are certainly not hoping for a trade war with either the UK or the EU but we want firm and robust engagement with our trade partners when South African interests in the wine industry or any other manufacturing sector are potentially going to be undermined.
"It is within that context that we're looking to engage the UK government, its major retailers as well as the local wine industry to ensure that where we can improve competitiveness, we do so," explained Hanival.
