An improving supply chain could help South African wine industry and raise the country's economic competitiveness, according to a study released on Tuesday.
Lack of supply chain awareness is hampering the competitiveness of South Africa's wine industry, said the study released in Johannesburg.
"Many cellars are still thinking like fruit farmers who merely sell their produce to exporters. It's a mindset that can, and must urgently change, if the South Africa wine industry is to be competitive," says Joubert van Eeden, study author and senior lecturer at Stellenbosch University's Department of Logistics.
Titled "Wine Supply Chain Survey 2012" conducted by Stellenbosch University (PwC) experts, the study notes that with some changes made to the industry's supply chains, South African wine will be able to compete far more effectively on the global market.
"Right now, increasing supply chain efficiency should also become a priority for struggling cellars to become more competitive in these tough economic times," Van Eeden said.
According to the Wines of South Africa (WOSA), the country's wine exports rose 469 million litres this year, up 25 percent from the previous 12 months and more than triple the total shipped in 2000. Bulk shipments of wine rose 53 percent while those of bottled and packaged wines fell five percent, as large producers bottled more in export markets.
The most alarming finding of the study is that many of the cellars surveyed do not have detail quantitative supply chain information available. Supply chain management deals with getting the right product or service to the right place at the right time and cost in order to satisfy customer needs.
"Many cellars don't recognize the existence of several supply chains -and most that are engaged in supply chain management are in the very early stages of supply chain maturity," Van Eeden said.
According to the study, a lack of supply chain capability is the root cause of this lack of understanding.
The study recommends the need for an in-depth study into how the industry packages the product for both locally and abroad supply.
"While researching the profitability of the wine industry, we discovered that literally millions of Rands are spent on research related to growing grapes and making wine, but little if any research is being done to figure out how best to get the wine from the cellar to the table," Van Eeden said.
"We hope to secure funding in 2014 that will enable a detailed study to also establish appropriate benchmarking capability and to see how supply chain profitability of the wine industry may be improved," he added.
Official figures show that while shipments of South African bottled wine to Britain and the United States fell in the five years to 2011, they rose sixfold to 4.28 million bottles in China and almost tripled to 3.44 million in Nigeria.