South Africa’s wine exporters are anxiously watching tariff negotiations with the US that could shape the future of the market.
Even after last week’s meeting with US President Donald Trump, there is no clarity on the sustainability of wine exports to the US should the proposed 30% tariff come into effect in July.
The wine industry — with about 2,500 producers and 500 processors — contributes about R5bn to GDP annually. It supports about 270,000 workers, primarily in the Western Cape.
In 2024, South Africa ranked eighth in global wine production, supplying about 3.8% of the world’s wine. There are about 300 South African wine exporters active in the US market. Total exports amount to nearly 12-million litres, valued at about R660m.
Christo Conradie of South Africa Wine says though this is relatively small compared with the 306-million litres imported by the US, the market plays a vital role within a diversified export portfolio.
The African Growth & Opportunity Act allows zero-tariff entry to the US market. “This has saved the industry an estimated R20m annually. If the current 10% interim tariff, introduced by the US in April, cannot be retained, urgently exploring new markets or deepening existing ones would be required. This shift is impossible to achieve overnight,” he says.
Conradie says the implications extend beyond the exporters and their immediate teams.
“The repercussions will be felt across the broader economy, including job preservation and creation, and [will] have a negative socioeconomic impact on rural areas where viticulture is a significant economic driver. Suppliers of glass, labels and packaging, logistics providers, and foreign currency inflows will all be affected.
“While a few brands may manage to absorb the increase, the likelihood of maintaining profitability and sustainable exports under such conditions is extremely slim.”
Maryna Calow of Wines of South Africa says global wine consumption has declined over recent years. “South Africa has not come away unscathed, but we are positive that there is still growth, especially in key export markets.”
But a 30% US tariff rings alarm bells.
A sudden loss of the US market would have a severe impact on the profitability and long-term sustainability of the industry
— Christo Conradie
“The financial sustainability of our producers has long been a concern, and we need to ensure that our wines reach viable price points. This will allow our producers to continue operating and enable them to reinvest in their vineyards, technology and people,” she says.
A sudden loss of the US market would have a severe impact on the profitability and long-term sustainability of the industry, says Conradie.
He says other US trading partners such as Argentina and Chile face only 10% tariffs, while the EU (20%) and Australia (10%) are also at lower levels. A 30% tariff could price South Africa out of the US market.
However, trade flows both ways.
“South Africa’s economic partnership agreement with the EU allows us to export nearly 120-million litres of wine duty-free,” says Conradie. “Imports from the EU to South Africa are also tariff-free. If South Africa considers adjusting its 25% import tariff on US wine to, say, 10%, it must do so cautiously.
“That tariff protects our developing wine industry from cheaper imports. Reducing it to 10% might be well received by the US, but under World Trade Organisation rules it would have to apply to all wine imports, including those from Argentina, Chile and Australia. This could lead to an influx of competitively priced bulk wine and exert pressure on local producers.”
Winemaker James McKenzie, owner of Snow Mountain Wines, which exports wine to 14 countries, says: “The US is a major wine producer, albeit of mostly expensive wines. Canada and other nations will use less US wine in the future, which opens up gaps for South African exporters.
“Big European producers are the most at risk — such as Champagne and many Italian producers — because they export most of their product to the US. China has been buying less from them ... domestic issues and the economic downturn are responsible.
“Several South African producers have put a lot of work into creating a US market, but I feel many smaller growers have found the complex domestic regulations in the US too burdensome.”
Conradie says tariff discussions with the government continue. “We have also contributed to Nedlac dialogues, submitting feedback through an industry-wide questionnaire to capture these tariffs’ unique circumstances and potential economic and socioeconomic impact.
“These discussions are at a sensitive stage, and we must find a balanced and pragmatic approach to any proposed import tariffs on bottled and bulk wine. While this is challenging, we are confident that government negotiators understand the urgency and will manage the intersection of political sensitivity and commercial reality with care, in pursuit of a workable and optimal solution to avert the imposition of a 30% US tariff.”
With the July deadline looming, however, negotiations will need to be finalised quickly. The clock is ticking.
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