E-mail: williamm@conninggarth.co.za Macro-economic impact of the wine industry on the South African economy Conningarth Economists PO Box 75818, Lynnwood.

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E-mail: williamm@conninggarth.co.za Macro-economic impact of the wine industry on the South African economy Conningarth Economists PO Box 75818, Lynnwood Ridge 0040, Pretoria, South Africa Tel: +27 (0)12 349 1915 E-mail: williamm@conninggarth.co.za

Growth 2008-2013 (current prices) (Rm) 2013 (Rm) % change 2003-2008 % change 2008-2013 Primary production 3 320 4 820 37 45 Total turnover (excluding tourism) 19 164 26 359 79 38 Exports 6 272 8 514 99 36 Taxes 3 459 4 802 71 39 Domestic sales 12 892 17 845 76

Real growth in turnover (Rm; 2013 = 100) 1999 2003 2008 2013 2013/ 1. Primary agriculture 2938 3247 2. Cellars 1424 1573 Sub-total 3184 4470 4363 4820 151.4 3.1 Manufacturing 5000 5635 7417 6510 3.2 Trade, catering, accommodation 8157 6730 8858 10227 Sub-total (1+2+3) 16341 18373 20820 26359 161.3 Taxes 1537 4545 4802 Foreign tourism 4551 4848 Local tourism 1051 1124 Total tourism 5602 5972 Total 24038 25601 30784 32331 134.5

Basic trends, 1997 - 2013 Cellars 1997 2008 2013 Producer cellars 69 58 50 Private cellars 218 504 493 Producing wholesalers 8 23 21 Total wineries 295 585 564 Crush 1-100 t of grapes 77 267 240 Crush 101-500 t of grapes 76 150 155 Crush 500-1000 t of grapes 32 Crush 1000-5000 t of grapes 52 63 55 Crush 5000-10000 t of grapes 19 15 17 Crush >10000 t of grapes 39 40 % that crush <100 tons pa 26% 46% 43%

Basic trends, 1997 - 2013 Vines 1997 2008 2013 Total vine area (ha) 87 301 101 325 99 680 Vines 4 years and older (ha) 76 025 92 504 91 972 Vines younger than 4 years (ha) 11 276 8 822 7 708 Vines < 4 years as % of total (replacement at 20 years on average implies an ideal of 15% per year for vines<4 years) 12.9 8.7 7.7

Basic trends, 1997 - 2013 Grapes 1997 2008 2013 Total production (million litres) 881 1 089 1 157 Wine production (million litres) 547 763 915 Wine as % of total production 62.1% 70.1% 79.1% Domestic sales (million litres) 367 356 370 Exports (million litres) 110 412 526 Proportion of production exported (%) 20.1% 53.9% 57.4%

Measuring the impact Direct impact: This occurs via production, payment of wages and salaries, and profit generation by grape growing, wine making and the manufacturing sector (making brandy and grape juice, making bottles and labels, etc.) Indirect impact: This refers to impacts on industries that provide inputs to the wine industry (e.g. the fertilizer industry) Induced impact: This refers to a further round of economic activity that takes place because of additional consumer spending as a result of the additional salaries and wages from upstream and downstream industries

Impact categories

Macroeconomic impact (1) Impact on R million GDP 36 145 Capital investment 62 277 Household income 23 579 - Low income 3 994 (17%) - Medium income 4 945 (21%) - High income 14 640 (62%)

Macroeconomic impact (2) Impact on R million Fiscal impact 11 598 - National gov 10 809 (93%) - Provincial gov 106 (1%) - Local gov 684 (6%) Balance of payments 17 783

Provincial impact Provinces GDP % Employment % Eastern Cape 10 8 Free State 4 Gauteng 15 13 KwaZulu-Natal 7 6 Limpopo 2 Mpumalanga Northern Cape North West 1 Western Cape 53 58 Total 100

Employment Numbers 2008 2013 Total 275 606 289 151 Skilled 36 551 (13%) 43 644 (15%) +7000 Semi-skilled 78 310 (28%) 84 769 (29%) +6400 Unskilled 160 745 (58%) 160 738 (56%)

Value chain of the wine industry GDP Employment

Poverty alleviation (R million) Economic Sector Low Income Medium Income High Income Total Primary Agriculture 55 (18%) 678 1 874 3 110 Cellars 238 (16.7%) 301 889 1 429 Distilling 858 1 085 3 187 5 130 Wholesale, Retail Trade 1 649 (16.9%) 2 027 6 094 9 770 Tourism 691 854 2 596 4 141 3 994 (16.9%) 4 945 (21%) 14 640 (62%) 23 579

Efficiency levels of the wine industry GDP/Capital Ratio Labour/Capital Ratio Low Income Households/ Total Households Ratio Wine industry 0.58 4.64 0.17 Agriculture 0.43 4.54 0.18 Mining 0.45 2.18 Manufacturing 0.47 2.88 Electricity and Water 0.24 1.13 Construction 0.59 5.99 Trade, Accommodation 0.57 4.52 Transport, Storage, Communication 0.35 1.95 Financial, Business Services 0.44 2.24 0.15 Community Services 0.78 4.45 Total economy 2.94 0.16