Required Report - public distribution

**Date:** 7/6/2005

**GAIN Report Number:** SF5023

SF0000

**South Africa, Republic of**

**Wine**

**Annual**

**2005**

**Approved by:**

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

U.S. Embassy

**Prepared by:**

Patricia Mabiletsa

**Report Highlights:**

The latest figures indicate that South Africa\'s 2005 wine grape
production is expected to decrease by 11.8% from last year to reach
1.157 million MT. Wine production in 2005, which includes juice and
concentrate for non-alcoholic purposes, rebate and distilling wine, is
expected to reach about 8.96 million HL, at an annual recovery rate of
7.74 HL 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 4](#production)

[Production Subcategory 7](#production-subcategory)

[Consumption 8](#consumption)

[Consumption Subcategory 8](#consumption-subcategory)

[Trade 8](#trade)

[Stocks 10](#stocks)

[Policy 10](#policy)

[Marketing 10](#marketing)

[Marketing Subcategory 11](#marketing-subcategory)

[RED VARIETIES 11](#red-varieties)

[WHITE VARIETIES 11](#white-varieties)

[All varieties 11](#all-varieties)

# Executive Summary

The latest figures indicate that South Africa\'s 2005 wine grape
production is expected to decrease by 11.8% from last year to reach
1.157 million MT, because of severe drought and scattered heavy rains in
the vine growing areas of the Western Cape. Wine production in 2005,
which includes juice and concentrate for non-alcoholic purposes, rebate
and distilling wine, is expected to reach about 8.96 million HL, at an
annual recovery rate of 7.74 HL per ton of grapes. Red wine production
will increase because of the increase in area harvested. Although the
crop produced good quality white wines, a shortage is expected
especially in Chardonnay and Sauvignon Blanc varietals.

South Africa's 2005 exports of natural wine are expected to grow by 12%
compared to last year, despite the lower production. The industry
expects to sell more of its export--quality wines in the domestic
markets because of a strong Rand. Imports are expected for distilling
wine and concentrate for sweetening this year, while juice imports are
expected for 2006.

# Production

South African Wine Information & Systems (SAWIS) reported that the 2005
wine grape harvest is expected to decrease by 11.8% because of severe
drought and unpredictable weather in the vine-growing areas in the
Western Cape.

The white wines, although lower in quantity, are expected to be of good
quality. Shortage is expected especially for Chardonnay and Sauvignon
Blanc varieties because of a lower crop this year resulting from a
severe drought. Natural wine production is expected to total 8.96
million HL, or about 13% less than in 2004. The recovery rate for juice
and concentrate for non-alcoholic purposes, rebate and distilling wine
is expected at 7.74 HL per ton of grapes. The significant decrease of
wine production was due to a severe drought that extended for two years
and unpredictable weather.

+-------------+--------+--------+------+---------+---------+---------+
| #######     |        |        |      |         |         |         |
| # TOTAL ARE |        |        |      |         |         |         |
| A PLANTED T |        |        |      |         |         |         |
| O ALL VINES |        |        |      |         |         |         |
+-------------+--------+--------+------+---------+---------+---------+
|             | 2002   |        | 2003 |         | 2004    |         |
+-------------+--------+--------+------+---------+---------+---------+
| VINE TYPE   | VINES  | HE     | V    | H       | VINES   | H       |
|             |        | CTARES | INES | ECTARES |         | ECTARES |
|             | ('000) |        |      |         | ('000)  |         |
|             |        |        | ('   |         |         |         |
|             |        |        | 000) |         |         |         |
+-------------+--------+--------+------+---------+---------+---------+
| Wine        | 2      | 96,233 | 300  | 98,605  | 305,010 | 100,207 |
| grapes\*    | 95,637 |        | ,845 |         |         |         |
+-------------+--------+--------+------+---------+---------+---------+
| Table       | 23,733 | 11,173 | 23   | 11,946  | 24,493  | 13,354  |
| grapes\*\*  |        |        | ,733 |         |         |         |
+-------------+--------+--------+------+---------+---------+---------+
| Sultana\*\* | 21,031 | 11,765 | 20   | 11,595  | 20,349  | 11,392  |
|             |        |        | ,756 |         |         |         |
+-------------+--------+--------+------+---------+---------+---------+
| Rootstocks  | 262    | 92     | 275  | 98      | 283     | 96      |
+-------------+--------+--------+------+---------+---------+---------+
| Currants    | 1,045  | 348    | 1    | 356     | 1,043   | 354     |
|             |        |        | ,065 |         |         |         |
+-------------+--------+--------+------+---------+---------+---------+
| **Total**   | **341  | **120  | **3  | **12    | **35    | **12    |
|             | ,708** | ,383** | 47,4 | 4,008** | 1,747** | 4,749** |
|             |        |        | 34** |         |         |         |
+-------------+--------+--------+------+---------+---------+---------+

Source: SAWIS

**\*= Includes Hanepoot also used as table grapes and for raisins**

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

**\*\*\*= For raisins only**

####### PRODUCTION PER REGION

2005 is expected to produce more red wines than the whites. Grape
bunches were looser and smaller than usual as a result of the lush
growth. Sun damage was limited as there were fewer heat waves despite
the drought. As a result of high humidity in November and December and
less wind - southeast and other -- botrytis and fungus caused harvest
loss. Vineyards were however relatively disease-free and no significant
problems were experienced, except for insect plagues in regions around
Stellenbosch and Paarl.\
\
The harvest came four weeks earlier, and many cultivars ripened
simultaneously at the beginning of each season. We expect shortages of
good quality white wines, especially Chardonnay and Sauvignon Blanc
wines, later this year.

  ------------------------ --------------- --------------- -----------------
  DISTRICT                 WINE GRAPE                      
                           PRODUCTION IN                   
                           MT                              

                           **2003**        **2004**        **2005**

                           **Actual**      **Actual**      **Latest
                                                           Estimates**

  Orange River             144,697         206,193         162,274

  Olifants River           205,150         178,590         176,447

  Malmesbury               109,118         103,947         97,710

  Little Karoo             42,301          44,522          36,018

  Paarl                    144,833         138,802         139,080

  Robertson                176,440         184,095         154,640

  Stellenbosch             114,285         115,276         116,469

  Worcester                296,865         340,759         274,993

  **Total Grape Prodn      **1,233,689**   **1,312,184**   **1,157,631**
  (MT)**                                                   

  **HL/MT grapes**         **7.75**        **7.74**        **7.74**

  **Wine Prodn (mil. HL)** **9.560**       **10.157**      **8.96**
  ------------------------ --------------- --------------- -----------------

Source: SAWIS ; **(April 29,2005)**

**\
**STELLENBOSCH

The 2005 harvest in Stellenbosch is expected to remain the same as last
year, but with quality red grapes because of slow ripening as a result
of good rains in January.

PAARL

2005 harvest remains fairly stable from last year. The season produced a
healthy Sauvignon Blanc crop. However, a 42°C heat wave that caused
stress on the vineyards that was followed by 60mm to 80mm of rain
resulted in a later harvest at drastically high sugar levels for other
wine grape varieties.

SWARTLAND

The 2005 total harvest decreased by about 10% from last year because of
extreme dry and cool climatic conditions. Expectations are for
production of soft but drinkable wines, with a short lifespan of not
more than 5 years. Sauvignon Blanc and Pinotage were harvested before
the late rains. Chenin grape varieties were of a lower quality, with
high pH values (more alkaline than acidic). Chardonnay and Merlot wines
are also expected to keep for maximum 5 years. Shiraz wines are expected
to be elegant and full.

ROBERTSON

The 2005 total wine grapes harvest decreased by 16% from last year
because of a drought. The white grape harvest decreased by 25% because
of botrytis infestations. Phenolic ripeness was also difficult in the
late Cabernets. However, Cap Classique wines are expected to reach world
standard this year. The Chardonnay and Shiraz at this stage are quite
elegant.

WORCESTER

The 2005 harvest decreased by 19% from last year to reach 274,993 MT
because of poor berry development that resulted from the drought.
Shortage for white wine varieties is expected because of poor pickings.
However, the drought is expected to produce exceptionally rich
full-bodied red wines and fruity white wines. At the beginning of the
season the dam\'s water levels were high enough for the growth season,
although the ground table was low. This allowed wine producers to
control grain size and to ensure a better husk-to-juice ratio. As a
result of the dry weather there were fewer diseases, and spraying was
reduced considerably. Harvest was early and yielded grapes with good
chemical composition because of early optimal ripeness.

LITTLE KAROO

The 2005 grape production is expected to decrease by 19.1% from last
year because of fungi and Botrytis infestations that result from
continuous rainfall, especially in the Tradouw valley. Production of
early white grape varieties was minimally affected as compared to the
red grapes that lost colour and flavour. Despite the uncooperative
weather, wine quality is forecast as promising, especially on vines that
were established on well-drained slopes.

OLIFANTS RIVER

The 2005 figures for total wine grape harvest shows a slight decrease
(1.2%) for red and white grapes varieties. The harvest started two weeks
earlier because of warm and dry weather. Sauvignon and Chenin Blanc were
pressed before mid-February and wines look promising. Late ripening
Shiraz and Cabernet Sauvignon were only pressed by end March, and the
quality is above average, with concentrated flavors, and dark colors. A
smaller quantity of wine is expected for bottling to maintain the same
quality as previous years.

ORANGE RIVER

The region was exposed to long periods of heat waves in December and
January that resulted in an early harvest. Harvest consisted of lighter
and smaller bunches of grapes. The total wine grape harvest decreased by
21.3% from last year because of lighter and smaller bunches of grapes
especially for Colombar, Chenin Blanc, and Ruby Cabernet. The sultana
crop is expected to be the smallest in decades.

Source: SAWIS ; **(April 29,2005)**

## Production Subcategory

+-----------------+-----+-------+-----+-------+-----+-------+--------+
| South Africa,   |     |       |     |       |     |       |        |
| Republic of     |     |       |     |       |     |       |        |
|                 |     |       |     |       |     |       |        |
| ###### Wine     |     |       |     |       |     |       |        |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
|                 | **  | *     | **  | **    | **  | **    |        |
|                 | 200 | *Revi | 200 | Estim | 200 | Forec |        |
|                 | 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**         |     | *01/2 |     | *01/2 |     | *01/2 | YYYY** |
|                 |     | 003** |     | 004** |     | 005** |        |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| TOTAL Grape     | 1   | 1234  | 1   | 1312  | 0   | 1158  | (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   | 3368  | 2   | 3637  | (1000  |
| Stocks          | 220 |       | 530 |       | 600 |       | HL)    |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| Prod. from Wine | 6   | 6960  | 6   | 6657  | 0   | 5960  | (1000  |
| Grapes          | 700 |       | 400 |       |     |       | HL)    |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| Prod. from Tabl | 2   | 2600  | 2   | 3500  | 0   | 3000  | (1000  |
| Grapes          | 600 |       | 600 |       |     |       | HL)    |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| **TOTAL         | **  | **9   | **  | **10  | **  | **8   | *      |
| PRODUCTION**    | 930 | 560** | 900 | 157** | 0** | 960** | *(1000 |
|                 | 0** |       | 0** |       |     |       | HL)**  |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| Intra-EU        | 310 | 0     | 320 |       | 0   | 0     | (1000  |
| Imports         |     |       |     |       |     |       | HL)    |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| Other Imports   | 0   | 435   | 0   | 13    | 0   | 370   | (1000  |
|                 |     |       |     |       |     |       | HL)    |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| TOTAL Imports   | 310 | 435   | 320 | 13    | 0   | 370   | (1000  |
|                 |     |       |     |       |     |       | HL)    |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| TOTAL SUPPLY    | 11  | 12215 | 11  | 13538 | 2   | 12967 | (1000  |
|                 | 830 |       | 850 |       | 600 |       | HL)    |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| Intra-EU        | 1   | 0     | 2   | 0     | 0   | 0     | (1000  |
| Exports         | 840 |       | 200 |       |     |       | HL)    |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| Other Exports   | 320 | 2329  | 330 | 2616  | 0   | 2930  | (1000  |
|                 |     |       |     |       |     |       | HL)    |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| TOTAL Exports   | 2   | 2329  | 2   | 2616  | 0   | 2930  | (1000  |
|                 | 160 |       | 530 |       |     |       | HL)    |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| Do              | 7   | 6518  | 6   | 7285  | 0   | 7453  | (1000  |
| m.Consump(Cntrl | 140 |       | 720 |       |     |       | HL)    |
| App)            |     |       |     |       |     |       |        |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| Dom             | 0   | 0     | 0   | 0     | 0   | 0     | (1000  |
| .Consump(Other) |     |       |     |       |     |       | HL)    |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| TOTAL           | 7   | 6518  | 6   | 7285  | 0   | 7453  | (1000  |
| Dom.Consumption | 140 |       | 720 |       |     |       | HL)    |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| End Stocks      | 2   | 3368  | 2   | 3637  | 0   | 2584  | (1000  |
| (Cntrl App)     | 530 |       | 600 |       |     |       | HL)    |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| End Stocks      | 0   | 0     | 0   | 0     | 0   | 0     | (1000  |
| (Other)         |     |       |     |       |     |       | HL)    |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| TOTAL Ending    | 2   | 3368  | 2   | 3637  | 0   | 2584  | (1000  |
| Stocks          | 530 |       | 600 |       |     |       | HL)    |
+-----------------+-----+-------+-----+-------+-----+-------+--------+
| **TOTAL         | **1 | **12  | **1 | **13  | **  | **12  | *      |
| DISTRIBUTION**  | 183 | 215** | 185 | 538** | 0** | 967** | *(1000 |
|                 | 0** |       | 0** |       |     |       | HL)**  |
+-----------------+-----+-------+-----+-------+-----+-------+--------+

# 

# Consumption

We expect domestic consumption of natural wine to increase by 2% in 2005
and to continue to increase by a smaller rate. Per capita consumption
will increase slightly to reach 0.29 HL in 2005 from 0.28 HL in 2004.
This analysis is based on the drinking population (2,5472,169) from the
census 2001, released in 2004. South Africa's normal drinking age start
at 18 years, however, because of the age ranges appearing in the census
report, drinking age is calculated from 20 yrs old.

According to SAWIS forecasts, demand for red wine in the medium price
range is expected to surpass supply in 2008 -- 2009. Red wine imports
are therefore expected to increase. The 2005-2009 domestic demand for
white wine, rebate wine, distilled wine, and non-alcoholic wine will
also exceed supply.

+---------------+----------------+-------------+-----------------------+
| **DOMESTIC    |                |             |                       |
| SALES OF      |                |             |                       |
| NATURAL       |                |             |                       |
| WINE**        |                |             |                       |
|               |                |             |                       |
| **(In HL)**   |                |             |                       |
+---------------+----------------+-------------+-----------------------+
|               | **Jan-Dec      | **Jan --Dec | **Market              |
|               | 2003**         | 2004**      | Share(Jan-Dec 04)**   |
+---------------+----------------+-------------+-----------------------+
| CWSI          | 1,226,031      | 1,214,240   | 39.33                 |
+---------------+----------------+-------------+-----------------------+
| Other         | 495,061        | 487,425     | 15.79                 |
| Wholesalers   |                |             |                       |
+---------------+----------------+-------------+-----------------------+
| Cellars       | 267,364        | 292,835     | 9.49                  |
+---------------+----------------+-------------+-----------------------+
| Co-operatives | 976,279        | 999,789     | 32.39                 |
+---------------+----------------+-------------+-----------------------+
| **Sub-total** | **2,964,735**  | **2994289** | **96.99**             |
+---------------+----------------+-------------+-----------------------+
| Wine          | 117,233        | 92787       | 3.01                  |
| component of  |                |             |                       |
| alc fruit bev |                |             |                       |
+---------------+----------------+-------------+-----------------------+
| **Total**     | **3,081,968**  | **          | **100.00**            |
|               |                | 3,087,076** |                       |
+---------------+----------------+-------------+-----------------------+

Source: SAWIS

## Consumption Subcategory

Local wine prices are expected to increase because of a smaller harvest
and reducing stock levels (reports, March 2005). Increasing number of
local producers gradually sell to the local markets because of
advantages of a strong Rand.

In 2004, natural wine reached a market share of 12.3% in the local
alcohol market, below beer (43.4%) and traditional beer (24.7%), and
above brandy (6.5%), other spirits (4.4%), alcoholic fruit beverages
(3.4%), whisky (2.7%), fortified wine (2.4%), and sparkling wine (0.3%).
Per capita consumption (in litres) reached 6.73 for natural wine, 0.17
for sparkling wine, and 0.75 for fortified wine, in the same year.

# Trade

South Africa's 2005 exports of natural wine are expected to grow by 12%
compared to last year despite a lower total production.

+------------------+---------------+------------------+---------------+
| South Africa,    |               |                  |               |
| Republic of      |               |                  |               |
|                  |               |                  |               |
| Wine             |               |                  |               |
+------------------+---------------+------------------+---------------+
| **Time Period**  | **Jan-Dec**   | **Units:**       | **HL**        |
+------------------+---------------+------------------+---------------+
| **Exports for:** | **2003**      |                  | **2004**      |
+------------------+---------------+------------------+---------------+
| U.S.             | 54,619        | U.S.             | 70,188        |
+------------------+---------------+------------------+---------------+
| Others           |               | Others           |               |
+------------------+---------------+------------------+---------------+
| U.K.             | 940,432       | U.K.             | 967,486       |
+------------------+---------------+------------------+---------------+
| Netherlands      | 452,722       | Netherlands      | 450,964       |
+------------------+---------------+------------------+---------------+
| Germany          | 187,276       | Germany          | 299,411       |
+------------------+---------------+------------------+---------------+
| Sweden           | 108,471       | Sweden           | 166,212       |
+------------------+---------------+------------------+---------------+
| Denmark          | 77,061        | Denmark          | 87,309        |
+------------------+---------------+------------------+---------------+
| Belgium          | 75,369        | Belgium          | 76,702        |
+------------------+---------------+------------------+---------------+
| New Zealand      | 65,624        | Canada           | 73,820        |
+------------------+---------------+------------------+---------------+
| France           | 58,500        | New Zealand      | 65,495        |
+------------------+---------------+------------------+---------------+
| Ireland          | 42,932        | Ireland          | 52,124        |
+------------------+---------------+------------------+---------------+
| Finland          | 33,072        | France           | 48,225        |
+------------------+---------------+------------------+---------------+
| Total for Others | 2041459       |                  | 2287748       |
+------------------+---------------+------------------+---------------+
| Others not       | 233,285       |                  | 258,258       |
| Listed           |               |                  |               |
+------------------+---------------+------------------+---------------+
| **Grand Total**  | **2329363**   |                  | **2616194**   |
+------------------+---------------+------------------+---------------+

Source: WTA

+-----------------+---------------+---------------------+------------+
| South Africa,   |               |                     |            |
| Republic of     |               |                     |            |
|                 |               |                     |            |
| ###### Wine     |               |                     |            |
+-----------------+---------------+---------------------+------------+
| Time Period     | Jan-Dec       | Units:              | HL         |
+-----------------+---------------+---------------------+------------+
| Imports for:    | 2003          |                     | 2004       |
+-----------------+---------------+---------------------+------------+
| U.S.            | 126           | U.S.                | 173        |
+-----------------+---------------+---------------------+------------+
| Others          |               | Others              |            |
+-----------------+---------------+---------------------+------------+
| Argentina       | 427,724       | Portugal            | 4,769      |
+-----------------+---------------+---------------------+------------+
| France          | 2,579         | France              | 3,368      |
+-----------------+---------------+---------------------+------------+
| Italy           | 1,704         | Italy               | 1,774      |
+-----------------+---------------+---------------------+------------+
| Portugal        | 1,544         | Netherlands         | 1,414      |
+-----------------+---------------+---------------------+------------+
| Belgium         | 356           | Chile               | 253        |
+-----------------+---------------+---------------------+------------+
| U.K.            | 291           | U.K.                | 247        |
+-----------------+---------------+---------------------+------------+
| Israel          | 215           | China               | 230        |
+-----------------+---------------+---------------------+------------+
| Spain           | 200           | Israel              | 168        |
+-----------------+---------------+---------------------+------------+
| Chile           | 100           | Australia           | 166        |
+-----------------+---------------+---------------------+------------+
| Greece          | 45            | Argentina           | 154        |
+-----------------+---------------+---------------------+------------+
| Total for       | 434758        |                     | 12543      |
| Others          |               |                     |            |
+-----------------+---------------+---------------------+------------+
| Others not      | 391           |                     | 293        |
| Listed          |               |                     |            |
+-----------------+---------------+---------------------+------------+
| **Grand Total** | **435275**    |                     | **13009**  |
+-----------------+---------------+---------------------+------------+

Source: WTA

# Stocks

The wine industry latest figures indicate a decrease in natural wine
stock level of about 29% from last year to reach 2.58 million HL by
December 31, 2005.

# Policy

No change in policy. Also refer to SF 4024.

The South African Wine and Spirit Board conducted a random testing for
illegal flavorants in 2004 vintage Sauvignon Blancs, covering about 25%
of South Africa's producers of the varietals and all the Cape's
wine-growing districts. Illegal flavorants were found from only one
producer, KWV, out of those sampled. The flavorants were added to 2004
KWV Reserve Sauvignon Blanc and the 2004 Laborie Sauvignon Blanc. 67,000
Litres of the contaminated wine, valued at about R1 million were
destroyed. Flavorants may not pose a health risk to consumers, but it is
illegal to use them to change the character of wines. Labelling
regulations requires the label should represent the content in a
container (Source: Supermarket & Retailers, Jan 2005).

# Marketing

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, microclimates 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.

Prices commanded by some of South Africa\'s top wines at the 2005
Nederburg auction, which took place in Paarl on April 9, more than
doubled, and was boosted by a more restricted, higher quality offering,
with the average price per nine-litre case of wine rising to R2 145 from
R843 in 2004. The annual Nederburg auction is South African wine
industry\'s most prestigious showcase of wines. It is organised and
sponsored by Distell -- one of South Africa\'s largest listed wine and
spirits producer.

However, wine industry commentators believe the escalated prices do not
reflect the current domestic market conditions in general, but only
those for the highest-priced, niche sector of the market. Many maintain
that red wine prices are likely to remain flat or decline slightly this
year given the rising supply of red wine and stiff competition in the
local market (particularly in the middle-and lower-priced market
segments), while higher quality white wines, in relatively short supply,
could experience moderate price increases this year.

## Marketing Subcategory

+-----------------------+-------------+-------------+-----------------+
| **AVERAGE PRODUCER    |             |             |                 |
| PRICES FOR WINE       |             |             |                 |
| GRAPES AT             |             |             |                 |
| COOPERATIVES          |             |             |                 |
| (RAND/TON)**          |             |             |                 |
+-----------------------+-------------+-------------+-----------------+
|                       | **2002**    | **2003\***  | **2004\***      |
+-----------------------+-------------+-------------+-----------------+
| # RED VARIETIES       | R10.5 = \$1 | R7.6 =\$1   | R6.24 = \$1     |
+-----------------------+-------------+-------------+-----------------+
| Cabernet Sauvignon    | 4,442       | 3,978       | 2,822           |
+-----------------------+-------------+-------------+-----------------+
| Cinsaut               | 2,736       | 2,690       | 1,966           |
+-----------------------+-------------+-------------+-----------------+
| Merlot                | 3,925       | 3,543       | 2,420           |
+-----------------------+-------------+-------------+-----------------+
| Pinotage              | 3,557       | 3,127       | 2,069           |
+-----------------------+-------------+-------------+-----------------+
| Pinor Noir            | 2,892       | 3,071       | 2,275           |
+-----------------------+-------------+-------------+-----------------+
| Shiraz                | 3,674       | 3,415       | 2,400           |
+-----------------------+-------------+-------------+-----------------+
| Other Reds            | 1,257       | 2,637       | 1,808           |
+-----------------------+-------------+-------------+-----------------+
| # WHITE VARIETIES     |             |             |                 |
+-----------------------+-------------+-------------+-----------------+
| Colombar              | 801         | 1,055       | 952             |
+-----------------------+-------------+-------------+-----------------+
| Semillon              | 1,230       | 1,588       | 1,549           |
+-----------------------+-------------+-------------+-----------------+
| Hanepoort White       | 799         | 1,074       | 1,064           |
+-----------------------+-------------+-------------+-----------------+
| Cape Riesling         | 881         | 1,289       | 1,227           |
+-----------------------+-------------+-------------+-----------------+
| Sauvignon Blanc       | 1,841       | 2,114       | 2,440           |
+-----------------------+-------------+-------------+-----------------+
| Chenin Blanc          | 916         | 1,207       | 1,071           |
+-----------------------+-------------+-------------+-----------------+
| Chardonnay            | 1,984       | 2,194       | 2,264           |
+-----------------------+-------------+-------------+-----------------+
| Other whites          | 615         | 843         | 862             |
+-----------------------+-------------+-------------+-----------------+
| # All varieties       | **1,307**   | **1,583**   | **1,321**       |
+-----------------------+-------------+-------------+-----------------+

Source: SAWIS; \* = estimates

+-----------------+-----------------------+----------------------------+
| **AVERAGE       |                       |                            |
| PRICES OF       |                       |                            |
| NATURAL WINE    |                       |                            |
| SOLD IN BULK**  |                       |                            |
|                 |                       |                            |
| **(R/HL)**      |                       |                            |
+-----------------+-----------------------+----------------------------+
| TYPE            | 2003 (Jan-Dec)        | 2004(Jan-Dec)              |
+-----------------+-----------------------+----------------------------+
| Cabernet        | 798.53                | 678.74                     |
| Sauvignon       |                       |                            |
+-----------------+-----------------------+----------------------------+
| Cabernet Franc  | 736.52                | 650.08                     |
+-----------------+-----------------------+----------------------------+
| Merlot          | 728.95                | 619.63                     |
+-----------------+-----------------------+----------------------------+
| Pinotage        | 635.85                | 510.18                     |
+-----------------+-----------------------+----------------------------+
| Ruby Cabernet   | 617.91                | 542.65                     |
+-----------------+-----------------------+----------------------------+
| Shiraz          | 756.52                | 635.30                     |
+-----------------+-----------------------+----------------------------+
| Cinzaut         | 537.18                | 482.80                     |
+-----------------+-----------------------+----------------------------+
| Chardonnay      | 470.17                | 485.06                     |
+-----------------+-----------------------+----------------------------+
| Sauvignon Blanc | 481.06                | 497.24                     |
+-----------------+-----------------------+----------------------------+
| Colombar        | 273.69                | 264.20                     |
+-----------------+-----------------------+----------------------------+
| Riesling        | 281.41                | 281.96                     |
+-----------------+-----------------------+----------------------------+
| Semillon        | 330.08                | 336.02                     |
+-----------------+-----------------------+----------------------------+
| Chenin Blanc    | 302.90                | 290.08                     |
+-----------------+-----------------------+----------------------------+
| All varieties   | 378.06                | 354.16                     |
+-----------------+-----------------------+----------------------------+

Source: SAWIS

EXCISE DUTY

+-----------------------+-----------------------+-----------------------+
| Excise duty           |                       |                       |
|                       |                       |                       |
| Wine (Rand/Litre)     |                       |                       |
+-----------------------+-----------------------+-----------------------+
|                       | February 18,2004      | February 23, 2005     |
|                       |                       |                       |
|                       | (Rand/Litre)          | (Rand/Litre)          |
+-----------------------+-----------------------+-----------------------+
| Natural wine          | 1.1710                | 1.4052                |
+-----------------------+-----------------------+-----------------------+
| Wine-based Wine       | 1.1710                | 1.4052                |
+-----------------------+-----------------------+-----------------------+
| Sparkling wine        | 3.2332                | 3.8799                |
+-----------------------+-----------------------+-----------------------+
| Fortified wine        | 2.3287                | 2.6314                |
+-----------------------+-----------------------+-----------------------+
| #                     |                       |                       |
| ##### Value Added Tax |                       |                       |
+-----------------------+-----------------------+-----------------------+
| Date                  | VAT RATE              |                       |
+-----------------------+-----------------------+-----------------------+
| April/7/1993 to 2005  | 14%                   |                       |
+-----------------------+-----------------------+-----------------------+

**TERMS USED IN REPORTING**

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

For more information on wine, go to:

[www.sawis.co.za](http://www.sawis.co.za/)

[www.wosa.co.za](http://www.wosa.co.za/)