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SA wine industry 'driving jobs, GDP'

16 February 2010

The South African wine industry's annual contribution to the economy grew to R26.2-billion or 2.2% of gross domestic product (GDP) in 2008, a new study finds, confirming the substantial growth in the industry and its economic impact since 2003.

According to a study conducted by Conningarth Economists for the South African Wine Industry Information and Systems (Sawis), when the previous study was done to measure the wine industry's macro economic impact on the economy in 2003, the industry's annual contribution was R22.5-billion.

According to Sawis chief executive Yvette van der Merwe, the study on the wine industry's macro economic impact confirmed the industry's growth trend.

"Wine is firmly established as the leader in exports from the agricultural sector, and is second only to minerals and motor cars, with the growth in exports substantially contributing to the rise in the industry's contribution to national GDP," she said at the release of the study at the Groot Constantia Wine Estate earlier this month.

Economic contribution, job creation

Of the over R26-billion contributed to the national economy, about R14.2-billion was generated in the Western Cape, with the industry supporting about 275 600 employment opportunities overall.

The total turnover of the wine alcohol industry in 2008 amounted to R19.2-billion. Of this amount, R6.3-billion was exported directly, while imports amounted to R237-million or about 2% of domestic sales.

Primary agricultural output valued at R3.3-billion was beneficiated and added in value downstream to the value of R19.2-billion – about five times the initial value of the raw materials – while another R4.3-billion is generated indirectly through wine tourism.

'Creator of economic growth'

What is also important to note is the measure of value added that takes place with every step of beneficiation, says Sawis.

Starting at farm level, the initial value of the raw material in terms of income created, amount to R3.4-billion and ultimately leads to a total GDP value of R21.7-billion, excluding tourism.

"This illustrates the exceptional ability of the industry as a creator of economic growth," says Sawis.

Compared with the 2003 study, it is evident that the wine industry as a whole did somewhat better over the 2003-2008 period. Total turnover grew by 79%. This growth can be attributed mainly to the excellent export performance – a close to doubling in current rand value terms since 2003.

The growth in value of domestic sales in nominal terms, over the period 2003-2008 amounted to 76%, while tax and excise amounted to R3.5-billion in 2008, growing by 71% since 2003.

"The study once again confirms the industry's importance to the Western Cape as a creator of employment opportunities on various levels – from vineyard workers to those involved in the tourist industry," said Van der Merwe.

"However, with the industry now having become a true global player, future growth is largely dependent on a favourable exchange rate for exporters."

SAinfo reporter