Examining factors affecting South Africa's wine exports to selected East African countries

Abstract

While developed countries represent South Africa’s largest wine export market, the projected global growth in wine exports is expected to originate from regional markets such as those in East Africa. However, no studies have specifically focused on South African wine exports to East African countries, using wine as a final and value-added agricultural product. Therefore, this study aimed to examine the factors affecting South Africa’s wine exports to selected East African countries, namely Kenya, Tanzania, and Mauritius. To achieve this aim, trend analyses were conducted to fulfil the first objective: to examine the trends in South Africa’s wine exports to the selected East African countries from 2012 to 2021. Additionally, the gravity model was employed to address the second objective: to analyse the factors affecting South Africa’s wine exports to these countries during the same period. The trend analysis findings revealed that South Africa experienced upward growth in the value of wine exports to the selected East African countries over the study period. Kenya and Tanzania stood out as the strongest markets with consistent demand, while Mauritius showed moderate demand, supporting the study’s focus on these East African markets. The gravity model results indicated that increases in South Africa’s production capacity, population size in the importing countries, favourable import duties, and a depreciated exchange rate boost South Africa’s wine exports to Kenya, Mauritius, and Tanzania. Therefore, the South African government should implement policies to expand wine production capacity, secure favourable import duty agreements, and leverage growing populations and exchange rate advantages to strengthen wine exports in East African markets. Conversely, rising inflation rates and increased foreign direct investment (FDI) in the importing countries negatively affect South Africa’s wine exports. To sustain market presence and boost wine exports to East Africa, the South African government and wine exporters should pursue partnerships or co-investment opportunities, while importing countries should adopt pricing flexibility or hedging strategies to counter inflation effects.