Determinants of producers’ choice of wine grape cultivars in the South African wine industry

The wine industry is one of the oldest commercial activities in South Africa. The South Africanwine grape industry annually produces more than a million tonnes of grapes, making the countrythe ninth largest producer in the world. The total area under wine grape production is divided intoeight regions for administrative purposes. These boundaries are a legacy of the era of controlledmarketing and there is continued meaningfulness of having various classifications such as ‘wine oforigin’ scheme.The purpose of this study is to identify the factors that determine the producers’ choice of winegrape cultivars in the wine regions in South Africa. Time series data for the period 1990-2003 wereused to estimate the parameters of linear regression models. Two equations for each wine grapecultivar in each region were postulated and estimated using Ordinary Least Squares as applied withEviews. Further, a stepwise regression as applied in STATISTICA was used to eliminate theparameters that were not statistically significant at five percent significant level.In identifying the factors that determine the choice of wine grape cultivars in the regions, theresults showed that each wine grape cultivar in each region has its own factors influencing theproducers’ choice of that specific wine grape cultivar. Same wine grape cultivars in differentregions similarly have its own factors determining the producers’ choice. The implication of this isthat there are differences in terms of the requirements and types of crops and wine grape cultivarsgrown in each region. However, the most important result that emerged with regular frequency isthat, the factors determining the producers’ choice of a specific wine grape cultivar for each regionis price of other wine grape cultivars and competitive products in that wine region. The price ofspecific wine grape cultivars only had an influence on few wine grape cultivars. The implication isthat the producers in South Africa appears to consider the prices of other wine grape cultivars andcompetitive products before making a choice of whether to plant or uproot a specific wine grapecultivar more than the price of the specific wine grape cultivar. This supports the theory that farmprices play a key role in allocating resources and in rewarding efficient producers.