CAPE TOWN (Reuters) - South Africa is mulling retaliatory measures to protect its centuries-old wine industry and counter job losses caused by a British retailers’ move to buy the product in bulk rather than in bottles, a trade official said.
British retailers including Tesco and J Sainsbury are bottling the bulk wine themselves, leading so far to as many as 700 job losses in South Africa, said Stephen Hanival, chief director of agro-processing at the Department of Trade and Industry.
“We certainly hope that the developments on bulk wine don’t lead to any kind of trade war between either South Africa, the UK or any of the European Union countries with whom we trade extensively,” Hanival told reporters late on Wednesday.
“However, South Africa does have a responsibility to protect its trade interests. Our view is that this is a serious risk to the South African wine industry,” he said.
The bulk buying helps British retailers save costs and package the products in ways that may be more appealing for local customers.
According to the Department of Trade and Industry, last year South Africa imported 1.7 billion rand ($204 million) of British whisky. It exported wine valued at 993 million rand to Britain during the same period, a significant trade imbalance, which Hanival suggested could be exploited to South Africa’s advantage.
“Why shouldn’t South Africa be importing bulk whisky from the UK and bottling it locally, so that we can at least attempt to prevent some of the job losses that we’ve seen up to now spreading to other parts of the economy,” he said.
South Africa’s wine industry currently employs around 275,000 workers and has seen exports grow more than 200 percent between 1998 and 2010, with the major markets including Britain and other countries in the European Union.
($1 = 8.2180 South African rand)
Reporting by Wendell Roelf; Editing by Jon Herskovitz and Alessandra Rizzo