Wine opportunities in East Africa
Thanks to urbanization and the emerging middle class, wine is gaining popularity in East Africa, offering opportunities for entrepreneurs.
The sun is shining brightly, though a cool breeze keeps it from getting too hot. Surrounded by rolling hills covered with rows and rows of grape vines, it is like being in France. But we are not even in Europe. We are paying a visit to the winery of French beverage company Castel in Ethiopia, in the volcanic and nutrient-rich Rift Valley, 163 kilometers south of the capital Addis Ababa.
“Although Africans tend to prefer beer over other alcoholic beverages, wine is becoming more popular. Because people have more disposable income, they travel more and get to learn about different food and drinking cultures”, Jean Wandimi, Kenyan wine blogger at The Wine and Food Review says. Other wine producers that tap into this emerging market in East Africa are Awash here in Ethiopia, Leleshwa in Kenya and Dodoma in Tanzania.
NO EUROPEAN SEASONS
Castel started the winery in Ethiopia in 2008, after receiving an invitation by former Prime Minister Meles Zenawi, and imported several grapevines by plane from France. “But these plans got completely confused as they weren’t used to a climate without European seasons and a sun that sets at 6 p.m. whole year round, ” site manager Olivier Spillebout explains while showing us around the vineyards where hundreds of Ethiopian men and women are hand-picking the grapes, wearing big straw hats to protect themselves from the sun. “We then searched for more suitable grape varieties and based our planning on the timing of the dry and rainy periods. We now do our pruning after the rainy season, for example, which is very different from producing wine in France”, the site manager adds.
Currently Castel has two product lines with four types of wine per line. The Rift Valley wines target the segment of the market of the more experienced wine drinker, like foreigners and customers at high-end restaurants while the other wines from the Acacia variety aim to please the emerging Ethiopian wine-drinker who prefers sweet and fruity wines.
PERFECT CLIMATE AND ALTITUDE
Castel believes that Ethiopia has the potential to rival the continent’s main wine producer, South Africa, in one or two decades. The vineyard in Ethiopia has an annual rainfall of about 650 mm, an average temperature of 25 degrees Celsius per year and sandy soils, which are ideal conditions for the development of quality wines. And due to Ethiopia’s proximity to the equator, it is even possible to harvest twice a year. “We are very lucky with the climate and high altitude over here”, Spillebout says. “It’s not too hot like sometimes is the case in Tunisia and Morocco, where we run wineries as well.”
Despite these ideal circumstances, the company also faces numerous challenges in the Horn of Africa. “While we produce quality products confirmed by our sommeliers in France, there is still work to be done on Ethiopia’s wine image”, the site manager tells. “Many of my fellow Frenchmen, for example, think that Ethiopia is only desert land so they cannot understand that it’s possible to produce gorgeous wines over here.”
QUICKLY GROWING WINE MARKET
Although the company benefits from several tax incentives, which provides duty and quota free access to US and European markets, and also received some investment incentives from Ethiopia, Castel has to deal with excessive import duties in Ethiopia. “As Ethiopia doesn’t produce wine bottles yet, we have to import them which is extremely costly”, Spillebout explains. And as Ethiopia is a landlocked country, all products have to be transported to Djibouti before they can be shipped to other continents.
However, the Frenchman is positive about the future. Castel Ethiopia already exports to over ten countries, including the U.S., England, France, Australia, the Netherlands, Uganda, Kenya and China, which is the largest importer, and plans to expand. And also local business is doing well. “The wine market is growing a lot in Ethiopia”, Spillebout states. “And as the Ethiopians start to trust our quality, they stop spending money on South African wines and shift over to ours.”
This article has earlier been published at the BlueBiz Club Africa website of KLM/AirFrance.