Importing wine in tanks and bottling it in Britain jeopardises hundreds of packaging jobs, government warns
The glass is half-full for South Africa's wine producers. The country has more than 100,000 hectares of grape-producing vines, a draw for tourists around the world. The 2012-vintage harvest is set to be the first or second biggest in history. Exports are growing.
Yet from the Cape's sunlit winelands, which have thrived for more than three centuries, comes the distant drumbeat of what some are describing as a "wine war" – against Britain.
It emerged this week that South Africa is considering retaliatory measures to counter job losses caused by a British supermarket's move to buy wine in bulk rather than in bottles.
Buying in bulk means that hundreds of millions of litres of wine are transported in tankers to a harbour, poured into a giant container and shipped overseas, where the bottling and labelling is done locally.
In 2008, 45% of South African wine was exported like this, against 55% that was packaged, bottled and labelled inside South Africa before shipping. But by the start of this year the situation was reversed, with 56% of wine exported in bulk and only 44% pre-packaged.
Shipping in bulk appeals to British retailers such as Tesco and Sainsbury because a giant container can hold a higher volume of wine than when it is divided among thousands of bottles. They can also package it more appealingly for local customers.
But the trend has so far led to 700 job losses among South Africans who package wine, according to the government, which raised the prospect of a tit-for-tat move on British whisky.
Stephen Hanival, chief director of agro-processing at South Africa's trade and industry department, said: "We certainly hope that the developments on bulk wine don't lead to any kind of trade war between either South Africa, the UK or any of the European Union countries with whom we trade extensively.
"However, South Africa does have a responsibility to protect its trade interests. Our view is that this is a serious risk to the South African wine industry."
Hanival said UK retailers insisted on bulk wine to save on costs. The UK's Waste and Resource Action Programme had campaigned for retailers there to import wine in bulk "under the guise" of environmental concerns, he added. Hanival warned that the problem could spread to other sectors of agriculture such as fruit.
Last year South Africa imported 1.7bn rand (£129m) of British whisky, the department said. It exported wine valued at 993m rand (£75m) to Britain during the same period, a significant trade imbalance, which Hanival suggested could be exploited to South Africa's advantage.
"Why shouldn't South Africa be importing bulk whisky from the UK and bottling it locally, so that we can at least attempt to prevent some of the job losses that we've seen up to now spreading to other parts of the economy?" he asked.
Government spokesman Jimmy Manyi said the cabinet had approved a series of actions to reduce the effect of bulk wine exports. Among nine proposals was a "study on the impact of possible bulk imports of whisky from the UK".
South Africa's wine industry has seen exports grow more than 200% between 1998 and 2010, with Britain the number one market for packaged wine and number two for bulk. Bulk export figures are up by 31% while exports of wine packaged in South Africa are down by 9% in the first six months of this year.
The wine industry loses about 107 jobs for every 10m litres of bulk wine exported, according to a three-year study by Wines of South Africa.
The shift is putting a squeeze on farmers, according to Sikhula Sonke, a women-led union of farm workers. Patricia Dyata, its general secretary, said: "The farmers aren't getting more income. The wine is made on this side and the exporters decide the price, not the farmers.
"So the profits decrease and it does impact on the workers. If we go to negotiate it becomes hard for the salary to increase beyond the minimum wage. If the exporters were willing to pay more, the farmers could pay more and keep people in permanent jobs with benefits."
Delheim is a family-owned wine farm in Stellenbosch that continues to bottle all its produce locally. But its director, Nora Sperling-Thiel, said: "I know a lot of the bigger guys had no choice but to move into bulk because of the competition in the UK market."
Jobs are disappearing, she added. "The label guys are not even printing any more, the capsule makers and the box makers are being bypassed. The whole packaging industry has been affected. It's not just because of the UK; it's a global trend."