Business Maverick

BUSINESS REFLECTION

After the Bell: Making lemonade in SA

After the Bell: Making lemonade in SA
The port of Durban sees off a shipment of South African citrus to the Philippines on 8 June 2021 in Durban, South Africa. (Photo: Gallo Images / Darren Stewart)

It’s funny how educational drinking wine can be. In vino veritas, the Latin phrase, indicates that people often tell the truth when a bit tipsy. But recently I learnt a different kind of truth while drinking wine: how astoundingly successful SA’s fruit exports are becoming. Why is that?

During a casual visit to the wine estate De Wetshof in Robertson, I got chatting, as one does, with the estate’s wine presenter. Robertson is an interesting wine-producing area for many reasons. It’s situated well outside SA’s wine heartland of Stellenbosch and it is, on average, warmer than most wine-growing regions, which ought to be an impediment. Yet what it lacks in a cool climate, it makes up for in soil quality, which is generally pretty high in limestone — often a mark of a quality wine-growing region.

De Wetshof is also an interesting producer because it’s focused on making chardonnay, and has a room full of international medals for its wines. Consequently, on my modest budget, the prices of some of the wines fit into what I call the “laughing, ludicrously” category, suitable only for foreign wine buyers who chuckle at our currency value and Russian oligarchs who chuckle at everything. But given these prices, one can only assume that the winery is making some solid cash — which is not something most wineries in SA do.

To make things even odder, De Wetshof is more or less opposite another winery, Van Loveren, which has a totally different strategy: volume. Van Loveren makes one of SA’s most popular wines, Four Cousins, and produces vast quantities of wine designed for the mass market. Somebody really ought to do a business school project on the two different strategies of the neighbours. Anyway, given its popularity, one assumes Van Loveren is also making good money.

I noticed that many of the hills close to the vineyards were covered in black netting, so I asked the De Wetshof sommelier, who said many of the vineyards were converting to selling fresh fruit. That seemed odd to me. Why was the land not being gobbled up by the neighbouring vineyards? Turns out that the profitability levels per hectare are around 10-to-one in favour of fruit. I was astounded.

From there I started taking an interest in the fresh fruit business in SA, and it really is quite extraordinary. Over the past five years, the industry has increased its production by about 25% in weight, and about 100% in export value. This is impressive: these were some tough years. More than 90% of SA production is exported, and the export destinations are extremely broad: about a third goes to Europe, but Malaysia, Russia, China, the US and — would you believe? — Bangladesh are all modest importers.

The fruit type is also very varied: oranges, apples and lemons predominate, but plums and avocados follow not far behind. The other interesting thing is that this is largely a Western Cape industry; about three-quarters of the exports go through Cape Town harbour. 

Total exports are now around R100-billion, which does not put fruit exports in the top 10 of SA export categories, which are dominated by mining products. But it must be getting close, because SA’s 10th-largest category is motor vehicles — roughly a R120-billion-a-year export market. (These figures are very loose, by the way; imports and exports jump all over the place depending on international markets and commodity prices.)

Fresh fruit imports are also increasing, but not at nearly the same rate as exports. I presume one of the big advantages for SA’s fruit producers is that they have a seasonal advantage; SA’s production is out of sync with Northern Hemisphere producers of the same fruits, so there is little reason for European producers to complain about SA fruit exports during the northern winter, for example. Not that they don’t of course.

Still, it’s nice to know that something in SA is working. As my wife keeps telling me, when life gives you lemons, make lemonade. DM

Gallery

Comments - Please in order to comment.

  • Dominic Rooney says:

    I was also surprised initially to read that using land to grow fruit produces ten times the profit of using it to grow grapes for wine but then thought about the various financial burdens of turning those grapes into wine – the capital costs, the operational costs, the delays in receiving the income and so on – and became less surprised.

Please peer review 3 community comments before your comment can be posted

We would like our readers to start paying for Daily Maverick...

…but we are not going to force you to. Over 10 million users come to us each month for the news. We have not put it behind a paywall because the truth should not be a luxury.

Instead we ask our readers who can afford to contribute, even a small amount each month, to do so.

If you appreciate it and want to see us keep going then please consider contributing whatever you can.

Support Daily Maverick→
Payment options