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Analysis of the South African Wine Industry

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The South African Wine Industry Competitors: Many of the large South African 'players' in the industry have begun to carve out US growth. Despite exports decreasing by 3million cases, shipments to the US rose by 17%. Distell and its 'Two Oceans' label are the largest exporters of premium wine in SA and intend to reach a critical mass in the US through a major volume driver. Industry experts state that SA does not need a huge new brand but rather a critical mass on the volume side to help drive the category. SA needs to develop its own unique styles rather than try to compete against the likes of Chile as they lack in vineyard scale. Elegant new styles of Pinotage are what have been exciting consumers who are willing to pay a premium for wines, which they view as fantastically good-value when compared to France. Climate: A number of acute water shortages took place in the Western Cape over the last few years, driven predominantly by changing weather patterns and rapid urbanization which is a concern. In the long-term, wineries won't be able to expand their volumes, however, can definitely look at using their energies to improving their quality. This year's harvest was "short, intense and an exceptionally difficult year from a logistical point of view," owing to such weather conditions. ...read more.


Agility - One of the main ways to achieve an agile response lies upstream of the company, in the quality of rationalized supplier relationships, which can be achieved in SA. By reducing complexity and forging strong relationships with suppliers, W&W will be able to become agile. There needs to be an exchange of information on demand and inventory levels along with collaborative working relationships across the entire chain. W&W could incorporate an emergency delivery service via a logistics provider if demand begins to suddenly increase, providing customer satisfaction over the standard cheaper delivery. Adaptability - Not only a requirement for success but an enabler of profitable growth by shortening the time needed to respond to customer demands. W&W should look to build stocks of finished products in order to help rapidly service the market needs especially being such a distance from the US. These stocks will then be potentially life saving for W&W if there is a bad harvest. Alignment - The supply chain strategy should represent W&W corporate strategy and drive alignment throughout the supply chain on objectives and aspirations from the grape farmers to senior managers through clear communication. This must be handled sensitively in SA to make sure that everyone involved understands. ...read more.


2 (2011) Annual Production (Gross Litres) 827.5 million (2011) 920 million (2011) 1,870 million (2010) Annual Export (Gross Litres) 725.3 million (2011) 950 million (2011) 417 million (2010) World Ranking in Wine Production 7th or 3% overall volume (2011) 5th 4th or 10% (2011) Getting Electricity (x/183) 124 (2011) 39 (2011) 17 (2011) Employees associated with the industry 275,606 (2011) n/a 1.1 million (2010) Litres exported to the USA 9,969,575 (2010) n/a n/a Wine Sale growth to the USA (%) 20% (2009-10) 29% (2011) 2.2% (2009-10) Trade Agreements SA Chile USA WTO member WTO Member WTO member FTA with the EU FTA with the EU FTA with 17 countries AGOA FTA with the US TIFA's New Member to BRICS BIT's Zero Tariffs to SACU Summary of Findings - From this selected statistical point of view, the data suggests that the USA would be the best country to expand into. However, these figures do not represent W&W's objectives and does not take into account market saturation, competitors or gaps in the market. These results are a simple overview and we cannot generate a prediction from these alone. Chile's results are noteworthy; due to a high GDP growth rate, low corruption, knowhow of how to export and positive ties with the US wine industry and population. SA cannot be discounted at this stage either. ...read more.

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