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[July 06, 2014]
Tanzania - Developing a good nose for wine [African Business]
(African Business Via Acquire Media NewsEdge) A short distance outside Tanzania's capital city are 150 hectares of land filled with clusters of red and white grapes that produce Dodoma wines. The brand takes its name from the city and the municipality in which the grapes are grown, and in 2013 it was ranked among Africa's top five, challenging South Africa's 350 years of dominance of the region's wine business.
But Tanzania's arrival on the international wine scene has been a long while coming.
Grapevines were first introduced to the central zone in 1938 by missionaries from the Hombolo Catholic Mission, who, after independence assisted in setting up production in Dodoma.
The four-acre grape farm at Dodoma's Isanga Prison was the first government institution to invest in wine; in 1969 it built a winery plant and achieved international recognition by becoming Tanzania's sole buyer of grapes for wine processing.
Local investors slowly began to consider the sector's potential and in 1979, the government established the Dodoma Wine Company, which bought grapes from farmers, established a research centre to determine appropriate types of grapes for wines and encouraged more farmers to start grape farming.
Attracted by high returns, Tanzania's Former Cabinet Minister and retired diplomat, Job Lusinde, also tried to set up the Tanwine company. The venture did not take off but it encouraged others to critically examine the sector, including Makutupora Grapevine Research Centre and Bihawana Winery.
Today, three main companies inhabit the country's wine sector: market leader Tanzania Distilleries, Dodoma Wines and Cetawico Tanganyika Vineyards, which produce variants of dry white, red and natural sweet wine including the brands Dodoma, Imagi, Overmeer, Presidential, Altar Wine and Sharye.
Dodoma continues to be the country's most important with an annual production of 1,000 tons, according to a 2011 study by VinIntell, with a positive outlook for continued growth and export opportunities. In the 15 years between 1998 and 2013, the export of Tanzania's grape wine increased from 176 kilos ($715) to 151,221 kilos ($26,238), according to data from the United Nations.
And as a grape-growing region, Dodoma is distinguished on two levels. It has two harvests in a year - one in March, and the second in August/ September - and its dry earth, sandy soil and low humidity are said to be perfectly suited to producing dry white and red wines.
International interest While the start of grape farming in Tanzania may be attributed to the missionaries, international investors helped to revive the sector. In 2002, an Italian engineer started what is today the Central Tanzania Wine Company (Cetawico) in Dodoma's Hombolo region. It produces the Sharye red wine brand. But it was the long-term investment and interest from Africa's largest wine producer that has given impetus to the struggling Tanzanian industry.
In 1999, South Africa's Distell Group acquired a 10% shareholding in Tanzania Distilleries (TDL), which it increased to 35% by 2001. The investment saw the South African group build capacity in Tanzania's marginalised rural areas, and conduct training on viticulture and lowtech vineyard management.
In 2009, TDL imported vines from South Africa to jump-start the local industry and meet the wine needs of the country's middle class. With these, it began to produce what are now the world-famous Dodoma, Imagi and Overmeer wines.
A 2012 report by David Mgwassa, managing director at TDL, says that as a result of the link between TDL and Distell, a threefold increase in yield per acre was experienced from three tonnes per acre to 10. A significant rise was also experienced in the amount of wine bought by TDL for brandy use, which increased from 211,890 litres in 2008 to 586,930 litres in 2011.
The Tanzanian-South African collaboration in the wine market was not new, however; in 1993 SABMiller invested $22.5m in Tanzania Breweries, giving them a 50% ownership over the company and allowing it to introduce its Castle Lager and Milk Stout brands into the local market.
Local investments Tanzania's agriculture sector accounts for more than a quarter of GDP, and provides 85% of its exports. Of this 85%, the greatest earners are its cash crops: coffee, cotton, sisal, tobacco and pyrethrum. Some attempts have been made to classify grapes as a cash crop but thus far the country's wine market has not been exploited. In 2013, however, the sector began to receive renewed attention after Chamwino District embraced the country's green revolution initiative Kilimo Kwanza (Agriculture First), and began to promote the cash crop value of grapes among farmers.
In May this year, Tanzania's Deputy Minister for Food, Agriculture and Cooperatives, Godfrey Zambi, announced plans to set up a processing factory in Chamwino, which would counter the challenges farmers face due to the perishability of the crop. The total cost of constructing the factory is estimated at TSh1bn ($580,000), and will be f unded by t he Tanzania Investment Bank, with whom Chamwino District Council has signed a memorandum of understanding.
The Chamwino factory will be Dodoma's third; it will consolidate it as the country's wineprocessing hub and help revive a processing industry that collapsed in the 1990s. The initiative is in keeping with the objectives of a national agriculture policy that advocates a move towards agro-processing industries in order to add value to crops and increase the price they attract in the international market.
Tanzania is slowly realising the economic benefits that a strong wine sector can offer. Its national brewer, Tanzania Breweries, was perhaps the first to acknowledge this when it highlighted in its 2011 annual report that it had experienced a 20% increase in sales, partly due to the exceptional performance of its wines business, which helped it achieve a corresponding operating profit of TSh184bn ($109 million).
Tanzania's 2014-15 national budget suggests the government is following suit, since it marginally reduced the excise duty on wine that is produced using more than 75% local grapes from TShs176 ($0.10) to TShs160 ($0.09) per litre.
But as local wine production rebounds, South Africa stands to lose the most. In 2011, Tanzania was the fourth-largest destination of South African wine on the continent. It imported TShs42m ($25,000) wor t h, with an earlier industry report suggesting that 85% of Tanzania's wine imports were South African.
But a 2011 report by VinIntell suggests that volumes of trade between the two may actually intensify as cooperation on technological, marketing and agriculture management, market access and agro-processing joint ventures increases. Going by May's South Africa-Tanzania Business Seminar, partnerships between the two countries are set to increase, particularly in Tanzania's cash crop sector.
In 2013, Tanzania's Dodoma wine was ranked among Africa's top five,challenging South Africa's 350 years of dominance of the region's wine business As Tanzanian wine production rebounds, South Africa stands to lose the most. In 2011, Tanzania was the fourthlargest destination of South African wine on the continent (c) 2014 IC Publications Provided by SyndiGate Media Inc. (Syndigate.info).
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