Investment Opportunities Available in the Wine Industry in Tanzania

Tanzanian wine industry does not have much international recognition, however, it is the second largest producer of wine in Sub-Saharan Africa after South Africa. Compared to the rest of the world, the history of wine in Tanzania is very recent and dates back to just a few years before independence. Tanzania only has one major grape growing region and it is centered around the Dodoma Region. Initially wine production and grape growing were limited to missionaries, however, in 1969 the government entered the market with the formation of the Dodoma Wine Company.

Production of Grapes in Dodoma Region

Dodoma is the main region in Tanzania where grapes are grown. According to data compiled by the Dodoma regional agricultural office, in the 2014/15 season, there were about 4,810 acres (1,924 ha) under grape production in the region.The total annual production was about 10,800 tons (2015), equal to an average yield of 2.25 tons per acre.

However, on account of lack of supply for bulk wine, the key buyers are forced to import bulk wine from South Africa despite serious tariff barriers (excise duty of TZS 2,130/liter and 18 percent Value Added Tax). The growth of bulk wine production in Dodoma has the potential to reverse the trend of importing from South Africa.It is revealed that the total supply and demand gap for bulk wine processors in Tanzania is about 5.2 million liters per year. The survey also indicates that there is significant foreign demand from nearby countries that are already purchasing grapes in Dodoma, such as Rwanda and Kenya. Rwanda buys at least 30 tons of grapes annually. On the other hand, Kenya purchases about 450 tons per year. This could be translated into 350,000 liters of juice and bulk wine. In addition, based on the reputation of Dodoma grapes, bulk wine from Tanzania is likely to fetch good market prices in developed countries, especially in Europe, Asia, and the United States. The domestic supply and demand gap cannot be met by the leading processors under the current capacities. Therefore, there is a need to increase capacity and establish new processors. This study demonstrates that there is a significant opportunity in the grape juice and bulk wine sector for farmers, processors and other local stakeholders. The next section presents
recommendations that should be implemented in order to meet the supply and demand gap.

RECOMMENDATIONS
The following measures should be implemented in order to
address the supply and demand gap:

• Develop a harmonized framework contract between buyers and grape farmers.
• Develop and carry out an awareness campaign on grape pricing and its associated products (i.e. bulk wine to grape farmers and local leadership).
• Engage local government in promoting compliance with the framework contract among parties, especially grape farmers.
•  Establish a credible institution to manage the quality of grapes and grape products (i.e. bulk wine as a key driver for price setting as per the would-be terms of the framework contract).
•  Promote extension services for farmers to increase productivity.
• Support farmers on basic infrastructure (i.e. development of irrigation schemes).
• Liaise with the Tanzania Chamber of Commerce, Industries, and Agriculture (TCCIA) Dodoma branch to lobby the government for promotion of the grape sub-sector in Dodoma.
• Increase acreage per household to take advantage of economies of scale.
• Persuade educated community members and groups,
who will eventually be sector think tanks and/or association leaders, to invest in the grape sector.
• Sensitize farmers to work closely with processors to understand and produce according to industry standards.
• Promote small-scale bulk wine producers through farmers associations as potential large-scale processor partners.
• Develop further branding of grape products, especially grape juices and other non-alcoholic sparkling grape drinks, to widen the grape market                                                                                   

•  Establish a loan facility and organize farmers to form Savings and Credit Cooperatives (SACCOs).