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#Wine retail – all the dirty secrets and how the consumer and farmer get skrewed

Why is the cellar hard pressed and why do wine prices creep up?

As in any industry there are forces at play. Most of which the consumer will never realize.

These affect price and availability of, in this case, you favorite wines.

The SA Gov yesterday decided to penalize the wine industry further by increasing the tax on wine by 13.5 c per bottle. Never mind the struggling industry which is the second largest housing provider in the Western Cape, the largest tax payer in the WC and the second largest employer in WC.

Wine has never received real support for the Gov.

To this people ask why should they?

Almost every other wine exporting country receives national support from their respective institutions. Its about the playing field. Other countries funding allows for low uncompetitive pricing in the international marketplace and growth through exposure in the media.

SA has one of the lowest price points inter nationality because we can only get to the consumer through price!

This glaring lack of support is again at odds with Pres Zuma’s plan for growing jobs in agriculture by 250 000 – how?

There has never been a SA inward focused wine marketing council to encourage wine knowledge and enjoyment. It is about time this takes place – with or without legislative support.

So the industry feels the squeeze from that side.

On the other side we have wine retailers in SA.

The farmer who manages to get his/hers wine to the shelf of the one of big 3 supermarkets will be expected to play between 7 and 12% in rebates (thanks for trading with us money) and discounts. This while the general consumer wants wines at very low prices. It remains true that SA wines offer great value for money – especially when purchased within SA.

The second tier of retailers have there own demands. One well established retailer in the Sandton area is believed to demand a flat 10% discount on all wines or he will not stock the wine brand – no matter the pull through demand. Then the inevitable discounts come into play.

The larger retail chains ask between R5000 and R7000 as advertising contributions should a cellar want to promote their wine. Cost of business or cost the consumer will pay eventually?

Even worse is that boutique retailers in the Cape conduct anti competitive behavior by informing cellars that if they sell wine to the likes of Getwine or Salewine  they will not stock the wines in their stores. (Last time we checked they could be fined 10% of their turnover for doing this by the Competition commission)

The now frozen / unfrozen toll tariffs in Gauteng would have added at least 20c “tax” onto a bottle of wine as well.

Lets not get into the 200% markups that restaurants add to wines – there the waiter makes more on a bottle in tips than the cellar received making it. There are also venues that demand R10 000 to place a wine on their wine list.

The consumer should understand why wines cost what is does and why the predicted food inflation actual exists.

The SA wine farmer needs support, so consider who you buy your wine from and how much it could cost SA’s growth and employment in the log run.



3 thoughts on “#Wine retail – all the dirty secrets and how the consumer and farmer get skrewed

  1. Good post!

    I would like to see the discounts that are given to restaurants and large supermarket chain stores, re invested in the development and training of staff in wine product knowledge and service. They should try outsourcing specialised trainers and wine list designers, who are dedicated in promoting the South African wine industry and brand SA as a whole.

    Posted by NIkki | February 24, 2011, 3:31 pm
  2. So they increased the tax- what is 13.5c per bottle if the price of wine has gone up by R5 per year. I look at the wines I buy and sure as nuts the prices have gone up a LOT. WInes priced at R65 a year ago is now R79. And then you blame the tax collector? At least with him the money is going to help us all!

    Posted by Eugene | February 25, 2011, 8:13 am

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