The six-billion rand question

Wednesday, July 23rd, 2014

International tourist arrivals to South Africa in 2013 almost touched the 10-million mark – a new high – and, last week, newly appointed Tourism Minister, the ANC’s Derek Hanekom, addressed Parliament, saying that bold new initiatives are needed to further grow the number of visitors to South Africa.

Mr Hanekom has good reason to be a little anxious about emulating his predecessor Marthinus ‘Kortbroek’ van Schalkwyk, under whom the industry contributed R93-billion to South Africa’s GDP and achieved “a staggering annual average real growth rate … of 7.3% over the past 20 years” in 2012.

There is a sound argument that one of the sectors Mr Hankom should look to is wine tourism. South Africa’s wine tourism in 2012 was rated the best-developed in the world by International Wine Review. “In 2009 wine tourism contributed an estimated R4.3-billion to our country’s tourism revenue, and we believe there is still great potential for growth in this regard,” Mr van Schalkwyk reported in 2012.

In 2012, tourism was responsible for directly employing 4.6% of the total workforce, more than those employed by the country’s very important mining sector, leading Mr Hanekom to call it South Africa’s “new gold”.

Just recently, Great Wine Capitals – a network of 10 global wine regions – announced the results of their 2013 wine tourism survey, The Pillars of Wine Tourism Performance, revealing that the most important factor driving tourists to wineries across the world was its association to a particular cuisine and what the region could offer in terms of an ‘authentic experience’.

The survey found ‘that Cape Town clearly surpasses other capitals in terms of numbers of visitors per winery’, which is no mean achievement, given, for example, Napa’s multi-billion dollar wine tourism industry. The other capitals comprise Bilbao/Rioja, Bordeaux, Christchurch/South Island, Firenze, Mainz/Rheinhessen, Mendoza, Porto, San Francisco/Napa Valley and Valparaiso/Casablanca Valley.

While comparing capitals, they found that the Cape winelands gave ‘the highest rate of stated responses for promoting sustainability and authentic experiences making good use of the region’s fame’. It revealed that over 70% of wine tourism revenue in Bilbao, Bordeaux, Christchurch and Cape Town came from wine sales.

Other areas in which the Cape excelled included food services and hosting events, while 43% of winery visits comprised local tourists – the highest percentage among the members. Interestingly, its report found that wineries in the Cape, Mendoza and Firenze appeared to be attracting a younger clientele than other regions.

While much of wine tourism originates in traditional markets like Germany, United Kingdom and the Netherlands, the Cape’s visitor information centres reveal that during the third quarter of 2013, growing numbers of visitors were from France, United States, BRIC countries (Brazil, Russia, India and China) and Africa, particularly from Angola and Kenya.

Meanwhile, wine exports to most of these countries are on the rise, particularly to France, Germany, China, USA and Kenya, with the latter three off small bases. Russia and Italy have also experienced robust growth in Cape wine imports in recent years, with total exports to all countries reaching more than 525-million litres in 2013 – another new record.

However, given that a traditional export market such as the UK is performing well with sales of packaged wines growing steadily, it is interesting  – according to PwC’s wine industry survey – to note more executives focusing their energies and budgets on emerging markets such as Asia, Africa and the USA.

Some of the latest figures available from South African Tourism (SAT) reveal that the Western Cape contributed R4.2-billion of South Africa’s R20.5-billion total tourist spend for the third quarter of 2013. South Africa’s international tourist arrivals grew at an annual average growth rate of 7.4% between 2011 and 2013, well above the global average of 4.5% for this period.

– Jonathan Snashall