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Origin Wine spearheads new campaign to get more wines bottled in South Africa

Published:  04 March, 2015

South Africa is set to increase its exports of bottled wine next year, following a change in the quota of duty free wine that is allowed to be exported to the EU as from 2016. In a campaign spearheaded by Origin Wines, one of South Africa's biggest exporters, other producers are being urged to switch to bottling to take advantage of the new allowances.

At present only wines shipped to the EU in packaging of less than two litres or less - predominantly bottles and bags in boxes - is eligible for the duty free exemption, which currently stands at 48 million litres, but is being increased to 110 million litres as from next year.

At current levels, this would mean that only 84 million litres would qualify because the vast majority of South Africa's wine exports to the EU is currently shipped in bulk, rather than being bottled at source. Last year 303 million litres of wine were exported to the EU, of which 62% was shipped in bulk.

Therefore, to take full advantage of next year's raised duty-free quota, the industry needs to increase its bottled output to the EU by an additional 26 million litres, which is the campaign's key aim.

"If we were to stick to the current arrangement not all of the benefits could be taken advantage of, so we are urging producers to shift from bulk to bottling so we can all capitalise on the increased duty free allowance," said spokesperson for the campaign Su Birch.

Other benefits, she added, would be the enhanced reputation of South African wines, as producers would have more control over what goes into the bottle. In addition, jobs will be created in bottling plants, as at present many plants have had to reduce their production because of the massive shift towards bulk wine. "At present many are running at less than full capacity," added Birch.

According to Origin Wines managing director, Neville Carew, producers will be able to bottle locally and export at less than the current cost of exporting in bulk and bottling in the EU.

The recent trend towards bulk has had a major impact on industry earnings, with the loss in direct revenue to the country in 2014 alone (had the percentage of packaged wine exports remained at levels achieved in previous years), calculated by the South Africa wine Industry Information and Systems at almost R1,9billion.

For every additional 10 million litres bottled in 2016, according to Carew, an estimated additional R200 million would be generated in direct income earned in the Winelands. The initial target for the industry for 2016, would be to achieve additional revenue of at least R550 million.

The bottling initiative, which will initially be targeting the EU trade, but will be expanding its message to reach wine lovers in key markets across the region, followed by a social media strategy, has received the enthusiastic backing of other big producers, he added.