A financial economic approach to management information in the wine industry

Master Thesis


Permanent link to this Item
Journal Title
Link to Journal
Journal ISSN
Volume Title

University of Cape Town

Wine is a beverage that accompanies and enhances a wide range of occasions, cuisines and even religious ceremonies in many cultures. It claims health benefits and brings wonderful memories to mind. We all have our own story to tell when it comes to wine. This however represents the consumer's experience. What is the producer's experience? Situation Wine markets across the globe are under pressure. According to Nielsen, over 3300 wine brands have flood grocery stores since 1999 and they now represent about 70% of active brands. South Africa owns 2.4% of the world's export market share, the 9th biggest, while wine production ranks 8t1, the world, producing 855,3 million liters for 1.7% of the worlds total production. Wine producers receive only 2% of the average R24 shelf price per 750m1 bottle of wine sold in supermarkets and at other retail outlets. On top of this the VinPro agricultural economist says wine production costs have increased by 17% but producers' incomes have risen only by an average of 3%. The industry had to deal with many challenges in its more than 300 year history e.g. the complete destruction of vineyards in 1890's due to phylloxera, single channel marketing, etc. but the economic reality of income not keeping pace with rising production costs brings one of the biggest challenges yet to the industry. Currently South Africa is known for its superb technical skills as far as wine making and viticulture is concerned. This can be seen from the amount of awards we as a country win in international competitions. It does not however create the necessary profits on the bottom line. It helps to sell the product, but still wine producers are more and more under extreme financial pressure and the current world economic condition is not helping. It is just not good enough to make the best possible wine any more, as several other forces are obviously at play here. We need to get an improved understanding of what really makes this business viable.

Includes abstract.

Includes bibliographical references.