Africa An Unexplored Market for Fine Wines

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Africa is a land of fortune and opportunities. There are so many untapped resources that the African Continent can benefit from if judiciously explored. Nearly half of the world’s gold and one-third of all minerals are in Africa.

The United Nations says Africa has about 20% of the world’s mineral reserves, 12% of the world’s oil and 8% of the world’s natural gas reserves.

It says the continent also holds 40% of the world’s gold and up to 90% of its chromium and platinum- both valuable metals.

The continent is full of possibilities and underutilised natural and human resources as well as businesses that, if ventured into, could yield huge returns and fully impact the continent’s economy. However, these have been ignored such that some economic experts have frequently argued that the continent is still in a poverty trap because it is not willing to exploit the available natural resources.

All across the different countries in the continent, there are deposits of one resource or the other waiting to be explored.

One untapped resource that the African Continent is yet to explore is its fine wine/wineries.
The global wine market size was USD 339.53 billion in 2020. The market is projected to grow from USD 340.23 billion in 2021 to USD 456.76 billion in 2028 at a CAGR of 4.30% in 2021-2028.

The global wine industry generates $29 billion in annual revenue and is at an inflexion point.

Societal and taste changes are poised to bring new frontiers and opportunities to the industry.

When it comes to this libation, your first thought might be the French countryside, the valleys of California, or even the hills of South America. But Africa should be on the radar of every wine connoisseur, too.

The northern parts of the continent have produced wine since the Phoenician times, while the south has created its vintages since the 16th century. And other parts of the continent have awoken to the magic of winemaking in the last three decades.

Morocco is probably the last continent that comes to mind when you think of a wine destination, but it, alongside Algeria, has produced wine for hundreds of years; the more recent one leading the wine market now is South Africa.

Africa is now becoming one of the biggest wine markets globally, with South Africa, Namibia, Ivory Coast and Kenya leading the way.

Yes, the continent could be the wine industry’s 21st Century answer to falling wine consumption in Europe and emerging markets.

It is now the second-fastest-growing economic region behind Asia and is rapidly becoming an attractive magnet for global brands such as Coca Cola and Vodafone.

In Kenya, its wine market has reached 102.8 million USD at retail prices between 2020-and 2025.

According to Wine East Africa data, the Kenyan wine market has a potential of 7.2 million litres annually with average revenue of Sh8.6 billion.

The sales of wines have increased in recent years due to the expansion in popularity of bars and other entertainment spots and restaurants, specifically in urban centres.

Kenyan wineries hope to one day go global. Produced in many regions, including Naivasha, the Yatta Plateau, and along the Great Rift Valley Escarpments, Kenyan wine is diverse in influence and flavour.

Furthermore, The Trade Kenya Wine Agencies limited with Yatta wines and the Rift Valley Winery with Leleshwa Wines are the two major players in the Kenyan wine market.

Therefore, if these sales are made locally, the revenue would accrue to the government if it considers making it a significant contributor to GDP by opening wine factories and attracting investors.

Kenya will ultimately experience exponential growth in the coming years, partly due to the change in lifestyle trends among urban Kenyan dwellers.

Many factors play a part. First is the increased availability of products in the Kenyan market.

Secondly is the growing number of distributors and producers and increased advertising.
On the other hand, the expansion of consumer education and the popularity of local wine brands led to a booming market.

Ivory Coast is another country that has fine wine resources. It exported 258 tonnes of wine in 2019. By 2019 alone, the demand for the Ivory Coast wine has increased, recording a change of 222.5 per cent compared to 2018.

Between 2017 and 2019, wine exports went up by 207.14%, bringing the country US$0.20m for the year 2019.

In 2020, the wine sector suffered a setback due to the impact of the covid 19 pandemic, and just like many other businesses and investments, it is still struggling to gain ground from the effects of the pandemic.

Morocco is the second-largest exporter of wine in Africa after South Africa. The combination of a generous sun and rich agricultural land provides the optimal condition for wine production.

Morocco is undeniably a land of vines, and despite the pressures of co-existing within a relatively conservative Muslim society, Moroccan wine production and consumption in Morocco is flourishing.

The first vines date back 2,500 years in the central Meknes region, but during the French Protectorate (1912 – 1956), the wine industry in Morocco was transformed.

Morocco has 14 wine regions centred around Meknes, Casablanca, Agadir, Boulaouane, Fes, Kenitra, Marrakech, Melilla, Ouarzazate, Rabat, Safi, Sidi Ifni, Tangier and Tetouan. Becoming more famous are the vineyards in Benslimane, Berkane and Guerrouane.

Current annual output stands at more than 40 million bottles of wine, making Morocco the second-largest producer in the Arab world. 85% of production is consumed by the domestic market, leaving 15% exported, mainly in France.

According to unofficial figures, Morocco’s wine industry now employs more than 20,000 people and generates about a 130million Euros.

Moroccan wine reaches Europe and other continents, including the US, Japan, and China.
South Africa is the 9th largest wine-producing country globally; it produces 3.4 per cent of the world’s wine and has seen enormous growth in the last decade.

With over 500 wineries, South Africa is one of the top wine-producing destinations in Africa and the entire world. Vino lovers are spoiled for choice here.

South Africa’s economy is a growing one; if it goes the extra mile to fully utilise the production of wine as a catalyst for development, it will be doing itself well and be putting Africa on the world map.

For instance, the South African wine industry contributes about 9 per cent to the country’s Gross Domestic Product, GDP.

The wine industry has built and continuously maintains a strong brand reputation for South Africa on the global stage, where it exports to 132 countries. The wine sector annually contributes R55 billion to GDP and employs more than 265 000 people.

However, for the South African wine industry to thrive and make remarkable impacts, according to Nedbank National Head of Agriculture, John Hudson, “It needs to move to a premium positioning in the global market, focus on inclusive growth and strive for environmental and financial sustainability.”

As the highest producer of wine on the continent, the government can use available agreements such as the African Continental Free Trade Agreement Area to develop strategies to uplift and explore untapped options in the wine industry.

The various other wine-producing countries on the continent can also do better by refocusing their thoughts and getting more creative along with the changing tides in the industry.

By so doing, each of the countries will be better off by contributing meaningfully to their country’s GDP and also stand as representatives of the continent.

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