South Africa’s wine industry expects increased global sales in 2010, although the strong and volatile rand threatens its long-term prospects. This is according to Su Birch, CEO of  Wines of South Africa

The sector expects the 2010 Fifa World Cup – which kicks off on June 11 – to boost sales hurt by a global economic crisis and weakened economies in key export markets across Europe and in the US.

South African wine producers and exporters were planning to use the world’s most-watched sports spectacle to increase marketing and the association is organising special braai festivals in key nations competing in the tournament, she said.

Leading supermarket retailers in Europe, such as Sainsbury and Tesco, were also eager to promote South African wines.

“There is huge interest and excitement around 2010. There isn’t a supermarket group in Europe that doesn’t want to do a South African promotion,” Birch said.

The estimated 450000 foreign tourists expected to attend the World Cup will be able to pick up quality wines – usually seen on European shelves – for about R30.

Exports for South Africa’s packaged wines were expected to increase by between 10% to 15% in 2010, Birch said, adding: “The interest around South Africa and South African wines as a result of 2010 is just phenomenal.”

But the strength of the rand – which gained about 30% against the dollar – was a concern for the industry. Analysts say the stronger rand has hit exporters hard as Africa’s strongest economy tries to recover after exiting its first recession in 17 years in the third quarter of last year.

“The currency is a huge worry and we fear that if it doesn’t move it will, in the long term, be the death knell of the industry,” Birch said. “It is crippling because nobody can make any [profit] margins and what is worse is the huge volatility.”

Birch said the industry, which employs some 250000 people, and last year celebrated its 350th anniversary, was struggling despite exports surging by 335% between 1995 and 2007. “The industry is really in financial trouble. There is no new [vine] planting going on, so we are not going to sustain growth,” she said.

Arniston Bay Brand News

The 2010 World Cup will add impetus to already successful and fast growing brands like Arniston Bay. The Arniston Bay wine brand has experienced a marked sales increase over the past year – latest figures reveal that off-trade sales are up 29% by value and 31% by volume (AC Nielsen: 52 weeks to 05 September 2009)

Source: timeslive