Macro-economic impact of the wine

industry on the South African economy

Conningarth EconomistsPO Box 75818, Lynnwood Ridge 0040,

Pretoria, South AfricaTel: +27 (0)12 349 1915

E-mail: williamm@conninggarth.co.za

Growth 2008-2013 (current prices)

2008(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 38

Real growth in turnover (Rm; 2013 = 100)

1999 2003 2008 20132013/1999

1. Primary agriculture 2938 32472. Cellars 1424 1573Sub-total 3184 4470 4363 4820 151.43.1 Manufacturing 5000 5635 7417 65103.2 Trade, catering, accommodation 8157 6730 8858 10227Sub-total (1+2+3) 16341 18373 20820 26359 161.3Taxes 1537 4545 4802Foreign tourism 4551 4848Local tourism 1051 1124Total tourism 5602 5972Total 24038 25601 30784 32331 134.5

Basic trends, 1997 - 2013Cellars 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 50 58

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 39

% 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 - 2013Grapes 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 categoriesDirect Impact32%

Indirect Impact30%

Induced Impact

38%

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 8Free State 4 4Gauteng 15 13KwaZulu-Natal 7 6Limpopo 2 2Mpumalanga 2 2Northern Cape 7 6North West 1 1Western Cape 53 58Total 100 100

EmploymentNumbers

2008Numbers

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 industryGDP Employment

Primary Agriculture

13%

Cellars5%

Manufactur-ing

23%

Trade, Cater-ing and Ac-commo da-

tion41%

Tourism17%

Primary Agriculture

17%

Cellars4%

Manufactur-ing14%Trade,

Catering and Accommo

dation52%

Tourism13%

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(16.7%) 1 085 3 187 5 130

Wholesale, Retail Trade

1 649(16.9%) 2 027 6 094 9 770

Tourism 691(16.7%) 854 2 596 4 141

Total 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 0.17•Manufacturing 0.47 2.88 0.17•Electricity and Water 0.24 1.13 0.17•Construction 0.59 5.99 0.18•Trade, Accommodation 0.57 4.52 0.17•Transport, Storage, Communication 0.35 1.95 0.17

•Financial, Business Services 0.44 2.24 0.15

•Community Services 0.78 4.45 0.15

•Total economy 0.45 2.94 0.16