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Wicked wine numbers up?

South African producers export more wine to the UK than to any other country, and you can be guaranteed that most producers who operate in this market will have gripes about having their margins squeezed by the ‘evil’ of the big supermarket chains. There is truth in this of course, with the buying power they wield and the competition at tight price points supermarkets around the world go as far as to consistently sell liquor below cost to keep convenience-seeking feet in their stores. Although the role of the indies looks set to increase again, the Tescos, Sainsburys and Waitrose boys rule the volume roost.

But when wine producers plan ways to get more UK consumers to drink wine, more often, consider this: last week I purchased twenty-four 440ml cans of a pretty good beer for £10. The bottle of wine that would have competed at that price would have been pretty good by supermarket standards, but try to convince an average consumer that it is good value when you have the beer promotion right next to it.

The change in government and the emergency budget in the coming month will be eagerly awaited by South African wine exporters. Current import duties and taxes add about £1.60 to each bottle that comes into the UK. With the Rand at R11.10 as I write, this is as tight a pinch as wine exporters have found themselves in for a while. As the duties go up they are disproportionately passed on to the producer as opposed to the consumer. With general expectation that the Rand will weaken in the months following the 2010 FIFA Football World Cup™ those producers still treading water after a rough 18 months are looking to the second half of 2010 to get their cash flow back in the black. So Captain Cameron and his sidekick will be under the Stellenbosch spotlight come budget day. The Tories pre-election manifesto gave fair emphasis to eradicating below cost sales and increasing taxes on alcoholic drinks that cause anti-social behavior. I am not aware of too many ASBOs issued to youngsters pissed on Pomerol, but we can probably expect wine to be lumped with the rest of Beelzebub’s bevvies.

WOSA’s good work has seen SA’s flag flying high in the past 12 months and some intelligent work from producers will help to retain some of the gains that have been made. But no matter what happens, SA producers need to bear in mind that while their wines may seem like good value compared to some other countries offerings, the unconverted portion of the UK population will still need some convincing when it comes to the wine vs ‘other’ question.

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