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Moves to revive SA’s wobbly brandy industry

SOUTH AFRICA - Brandy makers are working to revive interest in their product amid declining local consumption.

SA is the world’s seventh-largest producer of brandy by volume and focus has been primarily on the domestic market. However, demand has been steadily contracting, with many locals choosing imported whisky ahead of brandy.

Since 2006, when the brandy tax rebate was withdrawn, consumption has dropped by 18.5-million litres a year to reach 30.2-million litres for the 12 months to June 2015.

With five litres of wine required to produce one litre of brandy, this has had serious implications on employment in the industry.

The Department of Agricultural Economics at Stellenbosch University estimates that the decline in the consumption of brandy between 2006 and 2013 resulted in the loss of R1.56bn in economic value-add to the South African economy and a loss of 7,526 job opportunities.

The director of the South African Brandy Foundation, which represents the country’s brandy producers, Christelle Reade-Jahn, said last week that among those most affected was a project in the Northern Cape established to supply grapes to the brandy industry.

The public-private partnership involving the national and Northern Cape departments of agriculture and a community on the Orange River was established in 2010 to capacitate emergent farmers.

Originally it was envisaged that 500ha would be used to plant brandy grapes, but to date just 87ha have been cultivated to meet demand.

Ms Reade-Jahn said producers had been focusing on improving reputational image, establishing educational initiatives, launching innovative products, hosting festivals and aligning with top names in local and international entertainment.

Ms Reade-Jahn said the industry had also been working to establish a naming convention for premium and super-premium brandy.

"Creating a geographic identity for local specialty brandies will not only augment the moves to enhance the category’s image in the domestic market but will assist the industry in (its) drive to build exports," said Ms Reade-Jahn.

She said the recovery of the industry would have a positive knock-on effect for the wine industry.

Meanwhile the industry has welcomed the government’s decision to introduce a differential excise tariff for potstill and vintage brandy. The excise rate, to be phased in over two years, will be lowered by a 10% differential to the spirits excise tariff.

"It will help to ‘premiumise’ the category and also provide the impetus for building brandy exports," said Ms Reade-Jahn.

March 8, 2016; http://www.bdlive.co.za/business/retail/2016/03/08/moves-to-revive-sas-wobbly-brandy-industry