Required Report - public distribution

**Date:** 6/14/2004

**GAIN Report Number:** SF4024

SF4024

**South Africa, Republic of**

**Wine**

**Annual**

**2004**

**Approved by:**

![](media/image1.wmf)Scott Reynolds

U.S. Embassy

**Prepared by:**

Patricia Mabiletsa

**Report Highlights:**

The latest figures indicate that South Africa\'s 2004 wine grape
production is expected to reach about 1.314 million MT, up from the
previous industry estimates of 1.250 million MT. The 2004 wine
production, that includes juice and concentrate for non-alcoholic
purposes, rebate and distilling wine, is expected to reach about 10.185
million HL, at an annual recovery rate of 775 litres per ton of grapes.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

Pretoria \[SF1\]

\[SF\]

Table of Contents

[**Executive Summary 3**](#executive-summary)

[Production 3](#production)

[Production Subcategory 6](#production-subcategory)

[Consumption 6](#consumption)

[Consumption Subcategory 7](#consumption-subcategory)

[Trade 7](#trade)

[Trade Subcategory 7](#trade-subcategory)

[Stocks 10](#stocks)

[Stocks Subcategory 10](#stocks-subcategory)

[Policy 10](#policy)

[Policy Subcategory 11](#policy-subcategory)

[Marketing 11](#marketing)

[Marketing Subcategory 11](#marketing-subcategory)

# Executive Summary

The latest figures indicate that South Africa's 2004 wine grape
production is expected to reach about 1.314 million MT because of good,
dry weather conditions in the Western Cape during December and January.
Wine production, which includes juice and concentrate for non-alcoholic
purposes, rebate and distilling wine, is expected at 10.185 million HL
at an average recovery of about 7.75 HL per ton of grapes, an increase
of about 5% from a former industry estimate. The 2004 season is expected
to have a bumper production because of conducive rainfalls and enough
sunlight in the Western Cape during December and January. Expectations
are for an increase in red wine production, attributable to the increase
in area harvested.

South Africa's 2004 exports of natural wine are expected to grow by
18.5% compared to last year. One of South Africa's largest wine and
spirits exporters, wines of South Africa (WOSA), expects to sell more of
its export--quality wines in the domestic markets because of a likely
oversupply worldwide. The industry does not expect more imports of bulk
wine this year, as compared to 2002 and 2003. However, expectations are
red wines may still be imported this year.

South Africa's wine industry hosted a Cape Wine Trade show from March
30 - April 2, 2004. The show, which is a biennial event, attracted about
1,200 wine buyers, of which about 940 were international.

# Production

The 2004 season is expected to have a healthy bumper crop because of dry
weather in the Western Cape during December and January. South African
Wine Information & Systems (SAWIS) reported that the Breeder River
valley was the only place infected with Botrytis at the beginning of the
season caused by sporadic southeasterly rain and high humidity. The cool
conditions encouraged growing and ripening although it delayed the 2004
harvest. The harvest was further delayed by a heatwave and rainfall at
the beginning of March. The grapes, normally in the cellars by early
March, were harvested 7-14 days later this year compared to 2003.

The wines are expected to be of good quality because of the cool season,
however they will develop more slowly than warm season wines. Wine
production, initially expected to be average, will reach about 10.185
HL, the largest crop ever in South African history, about 6.5% more than
in 2003. The recovery rate for juice and concentrate for non-alcoholic
purposes, rebate and distilling wine is expected at 7.75 HL per ton of
grapes. The significant increase of wine production was due to an influx
of damaged tablegrapes from Orange River and also expanded area planted
in Worcester.

+-------------+--------+--------+------+---------+---------+---------+
| #######     |        |        |      |         |         |         |
| # TOTAL ARE |        |        |      |         |         |         |
| A PLANTED T |        |        |      |         |         |         |
| O ALL VINES |        |        |      |         |         |         |
+-------------+--------+--------+------+---------+---------+---------+
|             | 2001   |        | 2002 |         | 2003    |         |
+-------------+--------+--------+------+---------+---------+---------+
| VINE TYPE   | VINES  | HE     | V    | H       | VINES   | H       |
|             |        | CTARES | INES | ECTARES |         | ECTARES |
|             | ('000) |        |      |         | ('000)  |         |
|             |        |        | ('   |         |         |         |
|             |        |        | 000) |         |         |         |
+-------------+--------+--------+------+---------+---------+---------+
| Wine grapes | 3      | 1      | 316  | 107,998 | 321,601 | 110,200 |
|             | 14,051 | 06,331 | ,669 |         |         |         |
+-------------+--------+--------+------+---------+---------+---------+
| Table       | 22,538 | 11,173 | 23   | 11,946  | 24,493  | 13,354  |
| grapes\*    |        |        | ,733 |         |         |         |
+-------------+--------+--------+------+---------+---------+---------+
| Rootstocks  | 404    | 143    | 262  | 92      | 275     | 98      |
+-------------+--------+--------+------+---------+---------+---------+
| Currants    | 1,016  | 333    | 1    | 348     | 1,065   | 356     |
|             |        |        | ,045 |         |         |         |
+-------------+--------+--------+------+---------+---------+---------+
| **Total**   | **23   | **117  | **3  | **12    | **34    | **12    |
|             | ,554** | ,979** | 16,9 | 0,384** | 7,434** | 4,008** |
|             |        |        | 31** |         |         |         |
+-------------+--------+--------+------+---------+---------+---------+

Source: SAWIS

**\*= A small fraction is used for wine**

####### PRODUCTION PER REGION

STELLENBOSCH

In Stellenbosch, total 2004 harvest increased by 8% over 2003 because of
ideal temperatures and enough late rains (August-September), with
increases for Shiraz, Merlot, and Pinotage, and a decrease for Cabernet
Sauvignon. The season was disease-free, except for oidium infections on
leaves at post-harvest. The cold spells during winter led to good
flowering and fruit-bearing stage of the vines. In January this year,
the Chardonnay berries were already at pea-size.

An average wine crop for Stellenbosch is estimated at about 98,000 MT
annually.

Stellenbosch 'Wine-of-Origin' region consists of more than 300 cellars
and growers, with an average annual wine crop of about 98,000 MT.
Harvesting in this area began at the end of January 2004.

PAARL

Total harvest was reduced by about 10%, for Chenin Blanc, Chardonnay,
Sauvignon Blanc, and Merlot, in 2003/4 because of the extremely dry
weather conditions in summer and winter that reduced the water level of
dams in the Boland. Heatwaves in January 2004 and early February also
aggravated the situation.

SWARTLAND

The 2004 total harvest decreased by about 6% from last year because of
the extreme dry and cool climatic conditions. The late cold and wet
conditions caused uneven budding for Shiraz, Cabernet Sauvignon, Merlot
and Chardonnay. Production decreased for Chenin Blanc, Chardonnay,
Sauvignon Blanc, Merlot and Cabernet Sauvignon.

ROBERTSON

The 2004 harvest rose by 4% from 2003 because of early Chardonnays and
increases of Pinotage cultivars that came into full production. The
ripening period was warm, with humid conditions before harvest, with a
heatwave in early January and February. The harvest was delayed by about
7-10 days. The overall quality for red wine is expected to be good, with
an improvement especially for Merlot.

WORCESTER

The 2004 harvest reached a huge increase of about 17% compared to 2003
because of less humidity and average maximum and minimum temperatures
that resulted in no infestations of fungal diseases. The harvest was
delayed by about 10 -- 14 days. Wine production of premium whites
increased by about 28%, while the reds increased by 31%. The area is
expected to produce more rebate wine as a result of a larger than
average crop size. The qualities of Chardonnay and dry white wines are
expected to improve.

LITTLE KAROO

Total grape production increased by 4% in 2004 from last year. Increased
production was from the Western Karoo, around Montagu to Barrydale
mainly from Colombar varieties as compared to the east, along Ladysmith
to Oudtstroon areas. The 2004 summer season was characterized by warm,
dry weather with little rainfall in January, which resulted in a little
sunburn damage around Montagu wine producing area. The eastern parts
experienced continuous thunderstorms with rain resulted in grape rotting
on early cultivars.

Despite the uncooperative weather, wine quality is forecast as
promising, especially on vines that were properly managed throughout the
season.

OLIFANTS RIVER

The 2004 figures for total wine grape harvest shows a decrease of about
12% from 2003 because of a serious drought that caused irrigation water
restrictions to less than half the normal volumes per hectare. Lower
crop size was for Colombar, Chenin Blanc, Hanepoort and Chardonnay
varieties. Red wine grape production increased to 19% of total
production from this region.

The ripening period was cooler, longer and disease free with only
isolated instances of downy mildew and rot. Above average white and red
wines are expected because of the slower deliveries that enabled smooth
handling by the cellars.

ORANGE RIVER

The total wine grape harvest increased by about 40% because more Sultana
table grapes, which were initially destined for fresh markets, were sent
for wine processing as a result of damage by heavy rains during first
week of January. Increases are also attributable to younger red wine
vines that came into full production. The quality of wine is not
expected to be as good as in 2003.

TABLE FOR EXPECTED 2004 GRAPE AND WINE CROP

+----------------+---------+---------+---------+---------+------------+
| **DISTRICT**   | **GRAPE |         |         |         |            |
|                | PRO     |         |         |         |            |
|                | DUCTION |         |         |         |            |
|                | IN MT** |         |         |         |            |
+----------------+---------+---------+---------+---------+------------+
|                | *       | **2     | *       | **2     | **2004\*** |
|                | *2002** | 003\*** | *2003** | 004\*** |            |
+----------------+---------+---------+---------+---------+------------+
|                |         | **P     | **A     | **P     | **Latest   |
|                |         | revious | ctual** | revious | E          |
|                |         | Est     |         | Esti    | stimates** |
|                |         | imate** |         | mates** |            |
|                |         |         |         |         | **(May     |
|                |         |         |         |         | 2004)**    |
+----------------+---------+---------+---------+---------+------------+
| Orange River   | 173.420 | 144,491 | 144,697 | 159,899 | 202,142    |
+----------------+---------+---------+---------+---------+------------+
| Olifants River | 165,603 | 209,350 | 205,150 | 188,415 | 179,711    |
+----------------+---------+---------+---------+---------+------------+
| Malmesbury     | 80,026  | 109,224 | 109,118 | 98,302  | 102,571    |
+----------------+---------+---------+---------+---------+------------+
| Little Karoo   | 42,020  | 42,306  | 42,301  | 44,633  | 43,951     |
+----------------+---------+---------+---------+---------+------------+
| Paarl          | 105,287 | 144,808 | 144,833 | 137,568 | 130,639    |
+----------------+---------+---------+---------+---------+------------+
| Robertson      | 165,304 | 176,489 | 176,440 | 185,300 | 184,027    |
+----------------+---------+---------+---------+---------+------------+
| Stellenbosch   | 76,999  | 114,695 | 114,285 | 124,200 | 123,100    |
+----------------+---------+---------+---------+---------+------------+
| Worcester      | 271,216 | 297,001 | 296,865 | 311,851 | 348,223    |
+----------------+---------+---------+---------+---------+------------+
| **Total Grape  | **1,07  | **1,23  | **1,23  | **1,25  | **1        |
| Prodn**        | 9,875** | 8,364** | 8,364** | 0,168** | ,314,364** |
+----------------+---------+---------+---------+---------+------------+
| **HL/MT        | *       | *       | *       | *       | **7.75**   |
| grapes**       | *7.72** | *7.72** | *7.75** | *7.72** |            |
+----------------+---------+---------+---------+---------+------------+
| **Wine Prodn** | **      | **      | **      | **      | **10.185** |
|                | 8.342** | 9.556** | 9.560** | 9.647** |            |
| **(mil. HL)**  |         |         |         |         |            |
+----------------+---------+---------+---------+---------+------------+

Source: SAWIS

\*Industry Latest Estimates

## Production Subcategory

+-----------------+-----+-------+-----+-------+-----+-------+--------+
| **South Africa, |     |       |     |       |     |       |        |
| Republic of**   |     |       |     |       |     |       |        |
|                 |     |       |     |       |     |       |        |
| ###### **Wine** |     |       |     |       |     |       |        |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
|                 | **  | *     | **  | **    | **  | **    | *      |
|                 | 200 | *Revi | 200 | Estim | 200 | Forec | *UOM** |
|                 | 2** | sed** | 3** | ate** | 4** | ast** |        |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
|                 | **U | *     | **U | *     | **U | *     |        |
|                 | SDA | *Post | SDA | *Post | SDA | *Post |        |
|                 | Of  | Est   | Of  | Est   | Of  | Est   |        |
|                 | fic | imate | fic | imate | fic | imate |        |
|                 | ial | \[Ne  | ial | \[Ne  | ial | \[Ne  |        |
|                 | \[O | w\]** | \[O | w\]** | \[O | w\]** |        |
|                 | ld\ |       | ld\ |       | ld\ |       |        |
|                 | ]** |       | ]** |       | ]** |       |        |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| **Market Year   | **  |       | **  |       | **  |       | **MM/  |
| Begin**         | 01/ |       | 01/ |       | 01/ |       | YYYY** |
|                 | 200 |       | 200 |       | 200 |       |        |
|                 | 3** |       | 4** |       | 5** |       |        |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| TOTAL Grape     | 1   | 1210  | 1   | 1314  | 0   | 1260  | (1000  |
| Crush           | 210 |       | 200 |       |     |       | MT)    |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| Begin Stock     | 0   | 0     | 0   | 0     | 0   | 0     | (1000  |
| (Ctrl App)      |     |       |     |       |     |       | HL)    |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| Begin Stock     | 0   | 0     | 0   | 0     | 0   | 0     | (1000  |
| (Other)         |     |       |     |       |     |       | HL)    |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| TOTAL Beginning | 2   | 2220  | 2   | 3568  | 2   | 4206  | (1000  |
| Stocks          | 220 |       | 530 |       | 600 |       | HL)    |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| Prod. from Wine | 6   | 6960  | 6   | 6680  | 0   | 6820  | (1000  |
| Grapes          | 700 |       | 400 |       |     |       | HL)    |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| Prod. from Tabl | 2   | 2600  | 2   | 3500  | 0   | 3050  | (1000  |
| Grapes          | 600 |       | 600 |       |     |       | HL)    |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| **TOTAL         | **  | **9   | **  | **10  | **  | **9   | *      |
| PRODUCTION**    | 930 | 560** | 900 | 180** | 0** | 870** | *(1000 |
|                 | 0** |       | 0** |       |     |       | HL)**  |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| Intra-EU        | 310 | 0     | 320 | 0     | 0   | 0     | (1000  |
| Imports         |     |       |     |       |     |       | HL)    |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| Other Imports   | 0   | 447   | 0   | 300   | 0   | 370   | (1000  |
|                 |     |       |     |       |     |       | HL)    |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| TOTAL Imports   | 310 | 447   | 320 | 300   | 0   | 370   | (1000  |
|                 |     |       |     |       |     |       | HL)    |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| **TOTAL         | **1 | **12  | **1 | **14  | **  | **14  | *      |
| SUPPLY**        | 183 | 227** | 185 | 048** | 260 | 446** | *(1000 |
|                 | 0** |       | 0** |       | 0** |       | HL)**  |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| Intra-EU        | 1   | 0     | 2   | 0     | 0   | 0     | (1000  |
| Exports         | 840 |       | 200 |       |     |       | HL)    |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| Other Exports   | 320 | 5485  | 330 | 6500  | 0   | 5500  | (1000  |
|                 |     |       |     |       |     |       | HL)    |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| TOTAL Exports   | 2   | 5485  | 2   | 6500  | 0   | 5500  | (1000  |
|                 | 160 |       | 530 |       |     |       | HL)    |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| Do              | 7   | 3174  | 6   | 3342  | 0   | 4000  | (1000  |
| m.Consump(Cntrl | 140 |       | 720 |       |     |       | HL)    |
| App)            |     |       |     |       |     |       |        |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| Dom             | 0   | 0     | 0   | 0     | 0   | 0     | (1000  |
| .Consump(Other) |     |       |     |       |     |       | HL)    |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| TOTAL           | 7   | 3174  | 6   | 3342  | 0   | 4000  | (1000  |
| Dom.Consumption | 140 |       | 720 |       |     |       | HL)    |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| End Stocks      | 2   | 3568  | 2   | 4206  | 0   | 4946  | (1000  |
| (Cntrl App)     | 530 |       | 600 |       |     |       | HL)    |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| End Stocks      | 0   | 0     | 0   | 0     | 0   | 0     | (1000  |
| (Other)         |     |       |     |       |     |       | HL)    |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| TOTAL Ending    | 2   | 3568  | 2   | 4206  | 0   | 4946  | (1000  |
| Stocks          | 530 |       | 600 |       |     |       | HL)    |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| **TOTAL         | **1 | **12  | **1 | **14  | **  | **14  | *      |
| DISTRIBUTION**  | 183 | 227** | 185 | 048** | 0** | 446** | *(1000 |
|                 | 0** |       | 0** |       |     |       | HL)**  |
+-----------------+-----+-------+-----+-------+-----+-------+--------+

# Consumption

South Africa's 2004 domestic sales of natural wine are expected to
increase by 5% or more because of a huge production. The two major wine
companies, Wines of South Africa and KWV, are also expected to sell more
wines locally this year because of a likely worldwide oversupply, and
the deregulation of the Act of 1924 that allows KWV to sell good wines
locally since March 2004. Before, KWV was restricted to sell only
fortified wines and brandy to local markets.

+-------------+----------------+-----------------+---------------------+
| **DOMESTIC  |                |                 |                     |
| SALES OF    |                |                 |                     |
| NATURAL     |                |                 |                     |
| WINE**      |                |                 |                     |
|             |                |                 |                     |
| **(In HL)** |                |                 |                     |
+-------------+----------------+-----------------+---------------------+
|             | **Apr 2002-**  | **Apr 2003 --** | # Market Share      |
|             |                |                 |                     |
|             | **Mar 2003**   | **Mar 2004**    | **(Apr 2003-Mar     |
|             |                |                 | 2004)**             |
+-------------+----------------+-----------------+---------------------+
| CWSI        | 1,285,643      | 1,222,423       | 39.63               |
+-------------+----------------+-----------------+---------------------+
| Other       | 546,101        | 404,327         | 16.03               |
| Wholesalers |                |                 |                     |
+-------------+----------------+-----------------+---------------------+
| Cellars     | 262,507        | 272,122         | 8.82                |
+-------------+----------------+-----------------+---------------------+
| Co          | 1,143,286      | 983,831         | 31.89               |
| -operatives |                |                 |                     |
+-------------+----------------+-----------------+---------------------+
| Sub-total   | 3,237,628      | 2,972,703       | 96.37               |
+-------------+----------------+-----------------+---------------------+
| Wine        | 129,923        | 111,905         | 3.63                |
| component   |                |                 |                     |
| of alc      |                |                 |                     |
| fruit bev   |                |                 |                     |
+-------------+----------------+-----------------+---------------------+
| **Total**   | **3,367,552**  | **3,084,609**   | **100.00**          |
+-------------+----------------+-----------------+---------------------+

Source: SAWIS

## Consumption Subcategory

None

## 

# Trade

South Africa's 2004 exports of natural wine are expected to grow by
18.5% compared to last year.

Reports are U.S. wine markets may end up with a glut of California wine,
which will drastically reduce imports. France, Italy and Chile also
increased their exports to the States.

This may result in a decline of South Africa's total wine exports to the
United States.

The industry expects the 2004 imports of bulk wine to be significantly
lower than in 2002 and 2003 because of above average production in the
local market. However, a minimum amount of red wines are likely to be
imported.

## Trade Subcategory

One of South Africa's largest wine and spirits exporters, wines of South
Africa (WOSA), expects to sell more of its export--quality wines in the
domestic markets in 2004 because of a likely worldwide over-supply. Bulk
wine for export is considered to be expensive because of the stronger
value of the Rand.

+-----------------+-----------------+-----------------+-----------------+
| **South Africa, |                 |                 |                 |
| Republic of**   |                 |                 |                 |
|                 |                 |                 |                 |
| **Wine**        |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| **Time Period** | **Jan-Dec**     | **Units:**      | **HL**          |
+-----------------+-----------------+-----------------+-----------------+
| **Exports       | **2002**        |                 | **2003**        |
| for:**          |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| U.S.            | 139,932         | U.S.            | 152,542         |
+-----------------+-----------------+-----------------+-----------------+
| Others          |                 | Others          |                 |
+-----------------+-----------------+-----------------+-----------------+
| U.K.            | 2,392,807       | U.K.            | 2,351,173       |
+-----------------+-----------------+-----------------+-----------------+
| Netherlands     | 865,603         | Netherlands     | 1,097,358       |
+-----------------+-----------------+-----------------+-----------------+
| Germany         | 371,811         | Germany         | 411,395         |
+-----------------+-----------------+-----------------+-----------------+
| Denmark         | 108,073         | Denmark         | 208,182         |
+-----------------+-----------------+-----------------+-----------------+
| Sweden          | 177,799         | Sweden          | 171,760         |
+-----------------+-----------------+-----------------+-----------------+
| Belgium         | 115,937         | Belgium         | 164,929         |
+-----------------+-----------------+-----------------+-----------------+
| New Zealand     | 62,386          | New Zealand     | 66,186          |
+-----------------+-----------------+-----------------+-----------------+
| France          | 104,091         | France          | 81,929          |
+-----------------+-----------------+-----------------+-----------------+
| Canada          | 169,263         | Canada          | 133,026         |
+-----------------+-----------------+-----------------+-----------------+
| Switzerland     | 68,448          | Ireland         | 125,736         |
+-----------------+-----------------+-----------------+-----------------+
| **Total for     | **4436218**     |                 | **4811674**     |
| Others**        |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| **Others not    | **52,426**      |                 | **520,674**     |
| Listed**        |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| **Grand Total** | **4628576**     |                 | **5484890**     |
+-----------------+-----------------+-----------------+-----------------+

+------------+----------+--------------+-------------+---------------+
| **SOUTH    |          |              |             |               |
| AFRICA,    |          |              |             |               |
| REPUBLIC   |          |              |             |               |
| OF**       |          |              |             |               |
|            |          |              |             |               |
| **200      |          |              |             |               |
| 3(JAN-DEC) |          |              |             |               |
| TOTAL      |          |              |             |               |
| EXPORTS,   |          |              |             |               |
| WINE       |          |              |             |               |
| (HL)**     |          |              |             |               |
+------------+----------+--------------+-------------+---------------+
| *          | **N      | **Not        | **          | **Total**     |
| *COUNTRY** | atural** | Sparkling**  | Sparkling** |               |
|            |          |              |             |               |
|            | **Hts    | **Hts        | **Hts       |               |
|            | 2204**   | 220421**     | 220410**    |               |
+------------+----------+--------------+-------------+---------------+
| U.S.       | 54,619   | 97,282       | 641         | 152,542       |
+------------+----------+--------------+-------------+---------------+
| U.K        | 940,433  | 1,401,986    | 8,755       | 2,351,173     |
+------------+----------+--------------+-------------+---------------+
| N          | 425,722  | 668,174      | 3,462       | 1,097,358     |
| etherlands |          |              |             |               |
+------------+----------+--------------+-------------+---------------+
| Germany    | 187,276  | 223,232      | 887         | 411,395       |
+------------+----------+--------------+-------------+---------------+
| Sweden     | 108,471  | 99,156       | 555         | 208,182       |
+------------+----------+--------------+-------------+---------------+
| Denmark    | 77,061   | 94,192       | 507         | 171,760       |
+------------+----------+--------------+-------------+---------------+
| Belgium    | 75,369   | 88,998       | 562         | 164,929       |
+------------+----------+--------------+-------------+---------------+
| New        | 65,624   | 0            | 562         | 66,186        |
| Zealand    |          |              |             |               |
+------------+----------+--------------+-------------+---------------+
| France     | 58,499   | 23,430       | 0           | 81,929        |
+------------+----------+--------------+-------------+---------------+
| Canada     | 56,748   | 76,278       | 0           | 133,026       |
+------------+----------+--------------+-------------+---------------+
| Ireland    | 42,932   | 81,852       | 952         | 125,736       |
+------------+----------+--------------+-------------+---------------+
| Finland    | 33,072   | 44,746       | 139         | 77,957        |
+------------+----------+--------------+-------------+---------------+
| S          | 31,828   | 23,438       | 319         | 55,585        |
| witzerland |          |              |             |               |
+------------+----------+--------------+-------------+---------------+
| **Total    | **2,1    | *            | **17,341**  | **5,097,758** |
| listed**   | 57,653** | *2,922,764** |             |               |
+------------+----------+--------------+-------------+---------------+
| **Total    | **1      | **206,230**  | **9,192**   | **387,132**   |
| unlisted** | 71,710** |              |             |               |
+------------+----------+--------------+-------------+---------------+
| **Grand    | **2,3    | *            | **26,533**  | **5,484,890** |
| total**    | 29,363** | *3,128,994** |             |               |
+------------+----------+--------------+-------------+---------------+

+-------------------+--------------+-------------------+--------------+
| **South Africa,   |              |                   |              |
| Republic of**     |              |                   |              |
|                   |              |                   |              |
| **Wine**          |              |                   |              |
+-------------------+--------------+-------------------+--------------+
| **Time Period**   | **Jan-Dec**  | **Units:**        | **HL**       |
+-------------------+--------------+-------------------+--------------+
| **Imports for:**  | **2002**     |                   | **2003**     |
+-------------------+--------------+-------------------+--------------+
| U.S.              | 23           | U.S.              | 395          |
+-------------------+--------------+-------------------+--------------+
| Others            |              | Others            |              |
+-------------------+--------------+-------------------+--------------+
| Argentina         | 313,043      | Argentina         | 427,740      |
+-------------------+--------------+-------------------+--------------+
| Spain             | 10,390       | France            | 5,636        |
+-------------------+--------------+-------------------+--------------+
| Portugal          | 8,880        | Italy             | 4,769        |
+-------------------+--------------+-------------------+--------------+
| France            | 5,428        | Portugal          | 4,632        |
+-------------------+--------------+-------------------+--------------+
| Italy             | 5,689        | Belgium           | 546          |
+-------------------+--------------+-------------------+--------------+
| U.K.              | 1,543        | U.K.              | 817          |
+-------------------+--------------+-------------------+--------------+
| Israel            | 912          | Israel            | 645          |
+-------------------+--------------+-------------------+--------------+
| Australia         | 417          | Spain             | 579          |
+-------------------+--------------+-------------------+--------------+
| Netherlands       | 150          | Australia         | 113          |
+-------------------+--------------+-------------------+--------------+
|                   |              | Netherlands       | 76           |
+-------------------+--------------+-------------------+--------------+
| **Total for       | **346452**   |                   | **445553**   |
| Others**          |              |                   |              |
+-------------------+--------------+-------------------+--------------+
| **Others not      | **49**       |                   | **1,378**    |
| Listed**          |              |                   |              |
+-------------------+--------------+-------------------+--------------+
| **Grand Total**   | **346524**   |                   | **447326**   |
+-------------------+--------------+-------------------+--------------+

South African imports of wine from Argentina increased by 37% in 2003
from a year earlier. The improvement in the value of the Rand benefited
the U.S. wine exporters as indicated by a sharp increase from the above
table. The industry does not expect more imports of bulk wine this year,
as compared to 2002 and 2003. However, expectations are red wines may be
imported this year.

+-------------+-------------+-------------+-------------+-------------+
| ###         |             |             |             |             |
| ###### SOUT |             |             |             |             |
| H AFRICA, R |             |             |             |             |
| EPUBLIC OF  |             |             |             |             |
|             |             |             |             |             |
| **20        |             |             |             |             |
| 03(JAN-DEC) |             |             |             |             |
| TOTAL       |             |             |             |             |
| IMPORTS,    |             |             |             |             |
| WINE (HL)** |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| **COUNTRY** | **Natural** | **Not       | **          | **Total**   |
|             |             | Sparkling** | Sparkling** |             |
|             | **Hts       |             |             |             |
|             | 2204**      | **Hts       | **Hts       |             |
|             |             | 220421**    | 220410**    |             |
+-------------+-------------+-------------+-------------+-------------+
| U.S.        | 126         | 248         | 21          | 395         |
+-------------+-------------+-------------+-------------+-------------+
| Argentina   | 427,724     | 16          | 0           | 427,740     |
+-------------+-------------+-------------+-------------+-------------+
| France      | 2,579       | 1,484       | 1,573       | 5,636       |
+-------------+-------------+-------------+-------------+-------------+
| Italy       | 1,704       | 3,026       | 39          | 4,769       |
+-------------+-------------+-------------+-------------+-------------+
| Portugal    | 1,544       | 3,088       | 0           | 4,632       |
+-------------+-------------+-------------+-------------+-------------+
| Belgium     | 356         | 170         | 20          | 546         |
+-------------+-------------+-------------+-------------+-------------+
| U.K.        | 291         | 468         | 58          | 817         |
+-------------+-------------+-------------+-------------+-------------+
| Israel      | 215         | 430         | 0           | 645         |
+-------------+-------------+-------------+-------------+-------------+
| Spain       | 200         | 360         | 19          | 579         |
+-------------+-------------+-------------+-------------+-------------+
| Australia   | 38          | 74          | 1           | 113         |
+-------------+-------------+-------------+-------------+-------------+
| Netherland  | 26          | 50          | 0           | 76          |
+-------------+-------------+-------------+-------------+-------------+
| **Total     | **434803**  | **9414**    | **1731**    | **445,948** |
| listed**    |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| **Total     | **472**     | **906**     | **0**       | **1,378**   |
| unlisted**  |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| **Grand     | **435,275** | **10,320**  | **1,731**   | **447,326** |
| Total**     |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+

# Stocks

South Africa's stock levels for wine at co-operatives and cellars are
expected to rise to 4.206 million HL on 31 December 2004 compared to
3.568 million HL of last year.

## Stocks Subcategory

None

# Policy

South Africa's wine industry operates under a free market system. Buyers
and exporters deal directly with the vineyards. Buyers can also buy
on-line at [www.cybercider.co.za](http://www.cybercider.co.za/)

The South African government is encouraging all private industries to
include a Black Economic Empowerment (BEE) strategic plan within their
sectors. Currently, the wine industry adopted such a plan, South African
Wine Industry Strategy Plan (WIP). The plan, that was prepared by the
South African Wine and Brandy Company (SAWB) through consultation with
the SAWB chambers representing the wine producers, labor, cellars, and
the wholesale trade, the South African Wine Industry Trust (SAWIT),
relevant government departments and agencies, and other stakeholders
within the industry. The plan was accepted by the Minister of
Agriculture as the strategic framework for cooperation and action in the
South African wine industry in October 2003. It addresses issues such as
equitable access and market participation, global competitiveness,
environmental sustainability and responsible consumption.

## Policy Subcategory

South Africa's 2004 budget resulted in an immediate increase in specific
Excise Duties (sin taxes) for tobacco and alcoholic beverages. As of
February this year, taxes on alcoholic beverages increased by 30.7% for
natural unfortified wine, 28% for sparkling wine, and 16% for fortified
wine. The excise duty also increased by 13.5% on spirits, by 9% on beer,
by 7.1% on alcoholic fruit beverages.

# Marketing

The wine industry hosted its largest show, Cape Wine trade show, from
March 30 - April 2, 2004 in Stellenbosch. The show covered about 5,000
square meters and showcased about 4,000 wines over 4 days. About 1,200
people attended the show, of which an average of 940 people were
international wine buyers, even though it coincided with a European
show. The local wine cuisine was also feature at the show and attracted
the country's premier chefs. The second Cape Wine show may take place
later at an unspecified time.

The WOSA delegates are scheduled to attend a Wine Trade show in Chicago
from June 20^th^ to June 22^nd^, 2004. Wines of South Africa will have
an exhibition stand of about 140 square meters, funded by the Department
of Trade and Industry. WOSA has about 35 importers and US-based
representatives of numerous South African suppliers.

South African wines occupy a unique position among New World wine
producers. Most of the wine is from the Western Cape, famous for its
varied topography, soils, micro-climates and vegetation. Research is
assisting producers to better manage current sites and to establish new
locations for vines, at high-lying mountain areas or around the nearby
Indian or Atlantic oceans. Recently, South African wine farmers are
experimenting with Italian and Spanish cultivars, moving away from the
traditional French varieties.

## Marketing Subcategory

A break-through in the wine industry history is KWV's (one of South
Africa's largest wine and spirits group) expected sale of about 25% of
its shares to an empowerment consortium, and the domestic selling of its
wine by June 2004. Initially, KWV was bound by its agreement with
Stellenbosch Farmers Wineries and Distillers Corporation to sell only to
the export market. This is a positive contribution of a merger between
Stellenbosch Farmers winery and Distillers corporation to form Distell.
The group also established two director positions on its Board for
empowerment appointments.

+-----------------------------+------------+------------+------------+
| **AVERAGE PRODUCER PRICES   |            |            |            |
| FOR WINE GRAPES AT          |            |            |            |
| COOPERATIVES (RAND/TON)**   |            |            |            |
+-----------------------------+------------+------------+------------+
|                             | **2001**   | **2002**   | **2003**   |
+-----------------------------+------------+------------+------------+
| # RED VARIETIES             | R8.8 =\$1  | R10.5 =    | R7.6 =\$1  |
|                             |            | \$1        |            |
+-----------------------------+------------+------------+------------+
| Cabernet Sauvignon          | 4,849      | 4,442      | 3,987      |
+-----------------------------+------------+------------+------------+
| Cinsaut                     | 2,257      | 2,736      | 2,746      |
+-----------------------------+------------+------------+------------+
| Merlot                      | 4,300      | 3,925      | 3,348      |
+-----------------------------+------------+------------+------------+
| Pinotage                    | 3,991      | 3,557      | 2,979      |
+-----------------------------+------------+------------+------------+
| Pinor Noir                  | 3,140      | 2,892      | 2,971      |
+-----------------------------+------------+------------+------------+
| Shiraz                      | 4,159      | 3,674      | 3,319      |
+-----------------------------+------------+------------+------------+
| Cabernet Franc              | 3,839      | 3,459      | 3,142      |
+-----------------------------+------------+------------+------------+
| Tinta Barocca               | 2,697      | 3,127      | 2,682      |
+-----------------------------+------------+------------+------------+
| Carignan                    | 3,430      | 4,929      | 4,725      |
+-----------------------------+------------+------------+------------+
| Ruby Cabernet               | 3,148      | 3,057      | 2,725      |
+-----------------------------+------------+------------+------------+
| Roobernet                   | 2,626      | 2,626      | 2,756      |
+-----------------------------+------------+------------+------------+
| Gamay Noir                  | 2,837      | 1,980      | 1,361      |
+-----------------------------+------------+------------+------------+
| Other Reds                  | 851        | 1,257      | 1,657      |
+-----------------------------+------------+------------+------------+
| # WHITE VARIETIES           |            |            |            |
+-----------------------------+------------+------------+------------+
| Colombar                    | 639        | 801        | 1,006      |
+-----------------------------+------------+------------+------------+
| White French                | 369        | 583        | 720        |
+-----------------------------+------------+------------+------------+
| Semillon                    | 970        | 1,230      | 1,592      |
+-----------------------------+------------+------------+------------+
| Hanepoort White             | 585        | 799        | 1,062      |
+-----------------------------+------------+------------+------------+
| Cape Riesling               | 611        | 881        | 1,278      |
+-----------------------------+------------+------------+------------+
| Gewurtztraminer             | 942        | 1,066      | 1,120      |
+-----------------------------+------------+------------+------------+
| Sauvignon Blanc             | 1,713      | 1,841      | 1,894      |
+-----------------------------+------------+------------+------------+
| Chenin Blanc                | 725        | 916        | 1,121      |
+-----------------------------+------------+------------+------------+
| White Muscadel              | 599        | 888        | 1,084      |
+-----------------------------+------------+------------+------------+
| Chardonnay                  | 1,732      | 1,984      | 2,084      |
+-----------------------------+------------+------------+------------+
| Weisser Riesling            | 928        | 1,127      | 1,310      |
+-----------------------------+------------+------------+------------+
| Bukettraube                 | 755        | 845        | 822        |
+-----------------------------+------------+------------+------------+
| Pinot Gris                  | 668        | 600        | 986        |
+-----------------------------+------------+------------+------------+
| Clairette Blanche           | 594        | 894        | 1,235      |
+-----------------------------+------------+------------+------------+
| Other whites                | 458        | 615        | 743        |
+-----------------------------+------------+------------+------------+
| # All varieties             | **1,136**  | **1,307**  | **1,263**  |
+-----------------------------+------------+------------+------------+

Source: SAWIS

+-----------------+-----------------+----------------+----------------+
| **AVERAGE       |                 |                |                |
| PRICES OF       |                 |                |                |
| DRINKWINE SOLD  |                 |                |                |
| IN BULK**       |                 |                |                |
|                 |                 |                |                |
| **(R/HL)**      |                 |                |                |
+-----------------+-----------------+----------------+----------------+
| TYPE            | 2002(Jan-Dec)   | 2003 (Jan-Dec) | JAN-MAR 2004   |
+-----------------+-----------------+----------------+----------------+
| Cabernet        | 822.87          | 798.53         | 758.36         |
| Sauvignon       |                 |                |                |
+-----------------+-----------------+----------------+----------------+
| Cabernet Franc  | 702.26          | 736.52         | 911.48         |
+-----------------+-----------------+----------------+----------------+
| Merlot          | 764.74          | 728.95         | 669.54         |
+-----------------+-----------------+----------------+----------------+
| Pinotage        | 681.43          | 635.85         | 519.59         |
+-----------------+-----------------+----------------+----------------+
| Ruby Cabernet   | 614.41          | 617.91         | 554.73         |
+-----------------+-----------------+----------------+----------------+
| Shiraz          | 748.04          | 756.52         | 616.84         |
+-----------------+-----------------+----------------+----------------+
| Cinzaut         | 484.44          | 537.18         | 534.22         |
+-----------------+-----------------+----------------+----------------+
| Chardonnay      | 396.06          | 470.17         | 469.14         |
+-----------------+-----------------+----------------+----------------+
| Sauvignon Blanc | 409.20          | 481.06         | 470.77         |
+-----------------+-----------------+----------------+----------------+
| Colombar        | 203.17          | 273.69         | 267.91         |
+-----------------+-----------------+----------------+----------------+
| Riesling        | 203.81          | 281.41         | 286.62         |
+-----------------+-----------------+----------------+----------------+
| Semillon        | 240.91          | 330.08         | 321.53         |
+-----------------+-----------------+----------------+----------------+
| Chenin Blanc    | 215.27          | 302.90         | 285.46         |
+-----------------+-----------------+----------------+----------------+

Source: SAWIS

**TERMS USED IN REPORTING**

Natural Wine = Total of Natural wine ( Hts 2204), plus Bulk wine(not
sparkling, Hts 220421), and Sparking wine ( Hts 220410).