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2013

Case Study: Chã Wines

G. Angelo Bernard

Produced from grapes grown inside the crater of an active volcano, Chã Wine has been an unexpected sensation. The purpose of this case study is to identify the steps that were taken to successfully develop the wine industry in Cape Verde, with a specific focus on the case of Vinhos da Chã (wines of Chã das Caldeiras). The case is also forward looking and makes specific, detailed recommendations about which target markets to focus on and what additional steps could be taken to drive significant new growth in wine exports.

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CASE STUDY - CHÃ WINES Objectives of the Study ................................................................................................................................. 4 Situation of the Case ..................................................................................................................................... 4 Summary ................................................................................................................................................... 4 Wine History & Characteristics ................................................................................................................. 4 Associação dos Agricultores de Chã/Chã Wine Cooperative .................................................................... 5 Assistance from COSPE and Other International Partners ....................................................................... 5 Business Fundamentals............................................................................................................................. 5 Summary of Actions Taken ....................................................................................................................... 6 Summary of Results (Total Production and Exports) ................................................................................ 6 The Global Wine Industry ............................................................................................................................. 7 Countries Ranked by Production by Segment .......................................................................................... 7 Countries Ranked by Exports and Imports ............................................................................................... 7 Countries Ranked by Consumption .......................................................................................................... 7 Competitive Issues .................................................................................................................................... 8 Wine Distribution Around the World............................................................................................................ 8 Types and Characteristics of Distribution Networks................................................................................. 8 Requirements for Accessing Distribution Channels .................................................................................. 8 The Local Wine Industry (Cape Verde) ......................................................................................................... 9 Comparison to Global Market................................................................................................................... 9 Capacity to Compete in the Global Wine Market ..................................................................................... 9 Recommendations/Finding A Way Forward ............................................................................................... 10 A Strategic Approach - Niches in Small Markets ..................................................................................... 10 A Strategic Approach - Niches in Large Markets..................................................................................... 11 Vinitourism.............................................................................................................................................. 12 Leveraging Social Media to Promote Cape Verde’s Wines ..................................................................... 12 Role of a Local Wine Producers Association ........................................................................................... 12 Participation in International Wine Tourism and Wine Conferences ..................................................... 13 General Lessons Applicable to Export of Agricultural Products from Cape Verde ..................................... 13 APPENDIX 1 – GLOBAL WINE PRODUCTION ............................................................................................... 15

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APPENDIX 2 – GLOBAL WINE EXPORTS ....................................................................................................... 16 APPENDIX 3 – GLOBAL WINE IMPORTS ...................................................................................................... 17 APPENDIX 4 – GLOBAL WINE CONSUMPTION IN SELECTED MARKETS ...................................................... 18

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Objectives of the Study The purpose of this case study is to identify the steps that were taken to successfully develop the wine industry in Cape Verde, with a specific focus on the case of Vinhos da Chã (wines of Chã das Caldeiras). The case is also forward looking and makes specific, detailed recommendations about which target markets to focus on and what additional steps could be taken to drive significant new growth in wine exports. In addition, the case offers general lessons which may be applicable to growing exports of agricultural products in Cape Verde.

Situation of the Case Summary Produced from grapes grown inside the crater of an active volcano, Chã Wine has been an unexpected sensation and a successful business undertaking that is driven by community-based cooperation. Organized around a group of small, independent producers in the remote community of Chã das Caldeiras, in the crater of a still-active volcano on the Island of Fogo, Chã Wine has not only gained considerable following in the domestic market but is also well received in international tasting events and can be found on store shelves as far away as Germany and the United States.

Chã das Caldeiras, Fogo, Cape Verde Chã das Caldeiras is a small community of approximately 1,000 inhabitants, situated within the crater of the active volcano, Pico do Fogo, on the island of Fogo, Cape Verde. Chã's climate and terrain are optimal for viticulture. Days are usually hot and dry, nights cool and humid. With sufficient rain, highquality, semi-sweet grapes grow (1.2 km² total) in the caldera's rich volcanic soils.

Wine History & Characteristics Viticulture in the region dates backs to late 1880s, when it is said an eccentric Count of Montrond, France stopped off on the island en route to Brazil carrying vines. From the standpoint of a business enterprise commercializing wine in the domestic and international markets, wine production in Chã, and in Cape Verde as a whole is a relatively recent phenomenon that was started by the Chã Wine Cooperative. Traditional and artisanal wine making, however, has been characteristic of the island over the ages. The red wine, vinho tinto, made from the low-lying Portuguese “preta tradicional” variety of grapes, has a dark red color with shades of purple. Odors include tones and flavors of small, dark fruits like the currant or blackberry. This sensation is enriched with shades of pepper and Muscat nut. The white wine, vinho branco, made from locally-grown Moscatel grapes, has a fresh taste, unique clarity, and golden shades. Odors include that of semi-sweet citric fruits like the grapefruit. The rosé wine, vinho rosé, uses a similar variety of dark grapes as the red. It has an elegant rose color with flavors of small, sweet fruits like currants and strawberries.

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Chã's best-known wine, however, is called Manecon, a traditional, semi-sweet or dry, house-made wine. Most households make Manecon for commercial production and personal consumption, but it is not exported. The wine can either be a red or white, dry or sweet, but the sweet red variety is by far the most popular. Chã Wine is a rare vintage; it is only one of very few wines produced from vines cultivated on the slopes and crater of an active volcano. The percentage of alcohol in the “Chã” wines (14%) is greater than what is typically found in wines from the EU or California (usually between 11.5-12.5%). Quality control and sanitary standards have been critical ingredients in the success of Chã Wine. During the wine-making process, much attention is given to the hygienic conditions of the cellar and machines. After arrival, the grapes are cleaned and are either crushed (to make red wine) or pressed (to make white and rosé). This process is done as quickly as possible to prevent contamination and odor. The pulp is then put in specially-designed barrels in the cellar, where the temperature remains cool even during the hottest days, to begin the fermentation process. This is when the sugar of the grapes turns to alcohol and where the unique characteristics of the wine begin to develop. Until the wines are bottled, they remain in barrels (to avoid exposure to sunlight and air), except for periodic filtrations to improve clarity.

Associação dos Agricultores de Chã/Chã Wine Cooperative The main organizing body in the village is the Associação dos Agricultores de Chã (the agricultural cooperative) which holds considerable sway over the local economy. Chã is the only area in Cape Verde that grows significant quantities of grapes and produces export-quality wines.

Assistance from COSPE and Other International Partners Since the early 1980s, the Chã Cooperative has received technical and other forms of assistance in winemaking from parties outside of Cape Verde. A group of Germans initially helped, but unsuccessfully, as the efforts were not specifically focused on wine-making but rather on the growth of a variety of agricultural products (including grapes). Then in 1998, the Cooperative received assistance from an Italian institution, Co-operation for the Development of Emerging Countries (COSPE). COSPE is a non-profit Italian association operating in the field of international co-operation and solidarity. COSPE operates in Africa, Latin America, Asia, the Mediterranean and Eastern Europe in projects that promote economic, environmental and social development. It supports the promotion of farming, craft and service industries through training, technical support and the creation of credit funds. The more focused and deeper assistance from COSPE in the areas of finance, technical support and marketing proved to be a catalyst in increasing the production and export of Fogo wines.

Business Fundamentals The Cooperative is a collection of agricultural operators who grow grapes (and other crops). The number of members of the Cooperative has increased from 7 in 1998 to around 103 in 2012. However, about 80-

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90% of the grapes are produced by 18 of the members. The most well known brands produced by the Cooperative are “Chã do Fogo” and “Sodade” wines. Most of the wine produced in Chã is consumed locally with a small amount exported. Most of the exported wine is exported to Portugal. A small portion of the exports go to the USA where they are imported and distributed by Arlindo Correia, owner of the Restaurant Laura and of the liquor store, Cape Verdean Liquor & Wine Cellar. The brands, Sodade and Chã, were exhibited for the first time at the Boston Wine Festival (the biggest wine exposition in the world) in early 2012 by Correia.

Summary of Actions Taken The actions which appear to have helped in the success of the Cooperative include: •

• • • •

The creation of the Cooperative itself to coordinate efforts of wine growers in Chã and to take advantage of the exemptions from import duties on equipment and from income taxes thus lowering production costs; The acceptance of outside aid especially from COSPE in the areas of finance, technical support in the growing of grapes and increasing the quality of the wine produced; Basic marketing efforts with the production of various COSPE pamphlets; Personal interest from a few Portuguese entrepreneurs in the distribution of wine in Portugal; Interest from a Cape Verdean immigrant in the USA for distributing Chã wines in the local Boston area through his personal distribution network (restaurant and liquor store).

Summary of Results (Total Production and Exports) The Cooperative has experienced rapid growth in cultivation of grapes and the production of wine. In 1998, there were 7 members in the Cooperative and 4,000 liters of wine were produced. By 2005 there were 29 members and 35,000 liters of wine were produced. By 2006, the production of wine had climbed to 60,000 liters from 62 members. In 2011, 106,000 liters were produced by the 107 members of the cooperative. Other sources suggest that total wine produced in Cape Verde in 2011 was 160,000 liters.

Summary of Challenges Despite the historical success, there are several challenges faced in the quest to dramatically increase the production and export of Cape Verdean wines. These include: • • •

The Cooperative itself lacks firm leadership; The wines of Cape Verde lack strong branding in the international marketplace; Wine distribution is very complex in most of the large international markets of high consumption and is controlled by small networks of distributors where access is difficult to gain and where distributions costs can be quite expensive; The Cooperative lacks the scale to produce wines that can be cost competitive and lacks the scale to produce wines in sufficient volumes to supply larger markets in consistent volumes;

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• • •

The Chã wines are not price competitive in the domestic market against foreign imports, despite the high import duties face by the imports – cheap, subsidized wines from Portugal and other EU markets; The use of modern marketing techniques is lacking in the approach of the Cooperative; The Cooperative does not appear to have well-defined external target markets; The Cooperative does not appear to have a specific export strategy but appears to be focused primarily on the growing of grapes to be used in the process of wine-making.

The Global Wine Industry Countries Ranked by Production by Segment In 2010, the total global production of wine totaled approximately 26.2 million tons, with Italy and France being the top producers with about 4.6 million tons each or 17% each of the global total, followed closed by Spain with 3.6 million tons. The top ten countries captured 83.5% of the global wine production in 2010 (see Appendix 1).

Countries Ranked by Exports and Imports Of course, the wine produced by a country is not all consumed there. As seen in the 2009 global statistics, about one-third of the wines produced in the global market are exported to other countries. However, about 84% of the exports are dominated by the top 10 wine exporting countries including: Italy, Spain, France, Australia, Chile, South Africa, United States, Germany, Argentina and Portugal (see Appendix 2). Not surprisingly, 9 of these 10 exporters are among the top 10 world producers. One unmistakable conclusion in this data is that there are two ways to tap into the market for wine exports. One way is to focus on the biggest import markets. This may be a feasible way for the biggest wine producers who have the capacity to compete and meet the high demands of the biggest markets for consumption. The other approach, which is more subtly suggested by the data but seems quite logical, is to execute a niche strategy that focuses on lesser known import markets where wine is not produced but consumed. This second strategy thus requires that we closely examine global per capita consumption patterns across countries. We look at that data in the following section.

Countries Ranked by Consumption Rather than look at all of the 220 countries ranked by annual per-capita consumption (2010 data), we have instead applied certain criteria which would allow us to identify those countries and regions which represent realistic opportunities for export of wines from Cape Verde. The criteria were as follows: 1) exclusion of countries with negative growth in wine consumption over the 2007-2010 period; 2) exclusion of countries where the population is too low (under 40,000) or too high (over 100 million); 3) exclusion of countries where the per-capita consumption is less than 0.5 liters per year; 4) elimination of saturated markets where the annual per-capita consumption exceeds 15

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liters regardless of population size, or where the population exceeds 10 million and the per-capita consumption exceeds 10 liters. After applying these criteria, 42 countries remain of the original 220 and are spread across all regions of the globe (see Appendix 4).

Competitive Issues While pricing is an important competitive factor in gaining broad consumer acceptance, there is still a wide open space for niche marketing especially in new world markets where consumers are unfamiliar with wine brands or where there are special consumer segments to whom a unique niche story can be pitched.

Wine Distribution Around the World Types and Characteristics of Distribution Networks There are typically two types of distributors - those which focus on distribution of locally produced wine, and those which are focused on the distribution of imported wines. And certainly, there are distributors who supply both local and imported wines to retailers. Retailers advertise and sell wines to the public, and distributors often assist or help fund the advertising efforts. Wine retailers come in many varieties including supermarket chains, department stores, small retailers, airlines, liquor stores, online retailers, and in some cases, wine producers themselves and distributors themselves may also be retailers. The variety may be influenced by local regulations regarding who may sell alcohol.

Requirements for Accessing Distribution Channels In the case of successfully exporting wines, the key is access to the distribution channels or to retailers. However, it is much easier said than done. Often, especially in the more mature markets, such as the United States, the distribution channels are dominated by a few large distributors who often command substantial “slotting fees� to place products in the array of selections that retailers can choose from. In addition, in the more sophisticated markets, wines must achieve certain ratings of quality and taste before they are highlighted by distributors or even retailers. Regulations in various countries may also require that foreign wines obtain specific licenses before the wines can be distributed within local markets. The price at which a wine is offered will determine into which competitive category the wine will fall. For less well known wines, it is difficult to compete in the higher price rangers where well known brands may dominate. However, being placed into the lower price category will mean that a wine may become lost among hundreds of competing labels and there are clear implications for the margins that a producer will realize when the wine produced must be priced cheap.

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Import duties may also be set by certain countries at levels that are meant to protect the local grape growers and local wine producers. These duties will clearly make the imported wines less able to compete with local brands or may even make certain markets entirely unviable. Certain markets or regions may have unique attributes that may create barriers to entry or barriers to success. For example, in the Asian region, there are major barriers related to the building of strong, personal relationships with the distributors. Distributors in some African countries are reputed to be extremely unreliable as partners and thus the distribution networks are weak. In the end, access to distribution is one of the critical factors but at the same time, it may be extremely difficult for Cape Verde’s wine producers to access those channels in the more developed wine markets because of distributor control as well as competitors with deep resources.

The Local Wine Industry (Cape Verde) Comparison to Global Market With 160,000 liters produced in 2011, Cape Verde’s wine production represents less than 1/1000 of 1% of global wine production, and even if all the production could be exported, it would represent less than 0.002% of the global market for exports. This level of production is infinitesimally small and thus it is necessary to approach the challenge of wine exports from Cape Verde from a much different perspective than capturing recognition on a global scale. Instead, we must think of very specific markets, even small or unknown markets, as potential opportunities. Cape Verde itself is a net importer of wines. With annual per-capita consumption of about 4.0 liters, it is implied that about 1 million liters of wine are consumed in Cape Verde while only 160,000 liters are produced. There is a clear implication that Cape Verde’s local market may be a significant opportunity for Cape Verde’s wine producers since more imported wines are sold than the entire local production. The key from an “export” standpoint is whether local wines sold locally can be sold to foreigners who spend foreign exchange.

Capacity to Compete in the Global Wine Market Cape Verde possesses some of the attributes that are necessary to compete in the global wine market. In particular, it has favorable factors of soil, site and climate in Fogo that influence wine quality. The technical expertise is also present within the local wine producers resources much of this having been developed with the aid of foreigners. However, the two critical areas where the capabilities are lacking are scale and marketing. Scale is a critical factor in being able to compete on the basis of price and financial margins. But there is extremely limited capacity to expand the growth of quality grapes in Fogo or anywhere else in Cape Verde. Thus Cape Verde wines will never be able to compete on the basis of price in the world market.

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This leaves niche marketing as one of the key development factors needed by Cape Verde’s wine industry in order to successfully crack the export markets.

Recommendations/Finding A Way Forward A Strategic Approach - Niches in Small Markets As noted in the analysis of the global wine market, Cape Verde is too small to register on the global wine production charts. The country’s wine industry lacks the scale, the brand and access to distribution that is necessary to compete head-to-head in the large wine import markets. However, we noted that there is a second strategic approach: half of the world’s wine exports are consumed over a broad range of wine consumption markets. It is thus necessary to indentify smaller markets (that is, markets which exclude the historical old world producers and the larger new world markets) because the barriers to entry may be much lower and the consumers less sophisticated and less set in their preferences. This is a niche strategy. We thus suggest a focus on smaller, emerging markets which have relatively high or growing consumption patterns, i.e., where the consumers are beginning to cultivate a relationship with wine. A review of the global consumption patterns (Appendix 4) indicate that examples of markets which may be receptive to wine imports from Cape Verde exist in all regions of the world. In particular, by focusing on the countries with stable regimes and strong or growing wine consumption, we see possibilities in the following regions and countries: 1) 2) 3) 4) 5) 6) 7)

Africa: Sao Tome & Principe, Tunisia, Mauritius and Ghana; South & Central America: Panama; Asia: Hong Kong, Mongolia and Malaysia; Caribbean: Aruba, Netherland Antilles, St. Lucia, Dominican Republic and Cuba; Eastern Europe: Poland; Western Europe: Norway and Finland. Middle East: UAE and Qatar

Of course, it is not necessary to attempt to access every single one of these possible markets. Further analysis is necessary to identify which of these would provide the highest possibilities for successful and profitable exports. The list is simply a way to sharpen the strategic focus. The key would be to identify which of these markets are likely to lead to potential success most rapidly via a process of deep analysis. For example, in Cuba, almost 7 million liters of wine were consumed in 2010. If Cape Verde wines could capture only 1% of the Cuban market, this would represent over 40% of Cape Verde’s entire wine production and could lead to a significant increase in exports. The point in this case, or in any other case, is to analyze that country’s wine market more deeply including social norms, wine preferences, import

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duties, regulatory structures, distribution, retailer types, competitive landscape and the types of marketing and advertising channels that are used to reach end-consumers. All of this must clearly be done within the context of financial feasibility for the producers. Thus, a very rigid and specific process of market selection and analysis can be used to assess and prioritize potential target export markets for Cape Verde’s wines. Financially feasible execution strategies can then be developed to pursue such high priority targets. Obtaining the necessary research data and developing strategies for the selected markets would also mean that the Chã wine producers would have to make contact with Wine Associations or Chambers of Commerce in the target countries in order to develop the necessary contacts and business relationships.

A Strategic Approach - Niches in Large Markets At the same time, it is probably reasonable to look at the possibility of finding niches in the more established, larger markets where a branding strategy focused on the story and unique attributes of Cape Verde wines may have some appeal. In particular, niches where a wine from an African country (very young market), with a unique combination of quality attributes of soil, site and climate (associated with a volcano), and a unique social context (alleviation of poverty) may form a powerful nichemarketing story. There is one example of a wine brand from South Africa which successfully entered niche markets in the United States and England. The wine brand is M’hudi and it shares similar characteristics with Fogo wines in terms of its historical development (technical expertise, wine quality) and current capacity to produce (scale). The M’hudi brand was picked up by Heritage Link Brands, a US-based importer and distributor of African wines that are marketed to African Americans and other target consumers in the USA. Outside of Heritage Links, M’hudi was unable to crack the general distribution channels in the USA because of an inability to price its wines competitively. The two companies, M’hudi and Heritage Links, met at the Soweto Wine Festival. This venue may be an interesting place for Cape Verde wine producers to meet foreign distributors who have a particular interest in wines from Africa (of which there are very few outside of South Africa). M’hudi also developed a distribution relationship directly with the retailer, Marks and Spencer’s in England which now represents about 50% of its exports. And, M’hudi Wines is sold on several international airlines such as Swiss Air, British Airways, and United Airlines. And it is also sold in Disney’s Epcot Center. In addition, there are several markets where relatively large diaspora communities can be found including certain areas in the United States, Portugal, Holland, France, Senegal, Italy and Germany among other countries. Relative to the amount of wine produced in Chã, successful development of a selected few of these diaspora-markets could provide a significant boost to exports of Chã wines.

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However, care should be taken not to spread export resources thin since there are many diaspora markets and they may be spread out over various communities in foreign countries. Finally, it should not be assumed since these consumers have Cape Verdean roots that they do not need to be effectively marketed to – in these larger foreign markets where Cape Verdean expats live, it should be remembered they have access to many competitive alternatives.

Vinitourism There are potential opportunities for local producers to sell their wines to foreigners. With half-million tourists visiting Cape Verde annually, especially from the old world wine countries with mature wine audiences, there is a huge latent market in tourism. Even in highly developed wine markets, many of the wine producers engage in a relatively new business model called vinitourism in order to further increase their wine sales. In this case, producers partner with the travel industry operators to sell tour packages that include the consumption and enjoyment of wine. In this way, a portion of the pre-packages tourism in the country is generated by the wine industry. In addition, because the source of most of the wine is Fogo, there may be an opportunity to significantly increase tourism to Fogo and Brava.

Leveraging Social Media to Promote Cape Verde’s Wines Cape Verde’s wine industry has no presence on social media. There is no website. There is no Facebook page (until recently Facebook.com/capeverdewine). Essentially, the Cape Verde wine industry does not exist outside of Cape Verde because no one can find any information about it. This is the problem that arises due to a lack of organization and effective marketing. It also suggests that not even one person among government organizations, private organizations or individuals in Cape Verde have taken sufficient interest in promoting the wines of the country, an effort that might take only a few minutes to initiate and mere hours to complete. There are thousands of examples of the effective use of web technology and social media to promote wines at either the national level. Here is an example of a Facebook page promoting New Zealand wines Facebook.com/newzealandwinegrowers. Here is an example of a website for a small wine producer Destinybaywine.com/intro.html. These are good examples of simple but effective marketing efforts aimed at educating and raising awareness among consumers. But make no mistake, this information will also be found by industry participants in other parts of the business chain who are seeking information.

Role of a Local Wine Producers Association A local cooperative of agricultural producers is a basic necessity to effectively organize, coordinate and aggregate the activities of small farmers. But it is certainly not sufficient. However, it appears that this is where the efforts of the Associação dos Agricultores de Chã and other cooperatives in Cape Verde stop. Much more needs to be done and could be done. Cooperatives should think and act in ways that extend well beyond coordination of agricultural output. They must also provide leadership in the areas business acumen for the industries the agricultural products they represent, most notably in the research, analysis and marketing exploitation of world markets.

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Industry cooperatives should coordinate with certain government institutions to obtain assistance in the leadership areas needed for success. For example, technical resources at INE could provide assistance in the areas of research and analysis; resources at ADEI could provide assistance in the area of strategic planning. Cooperatives can also undertake the job of effective marketing – educating potential buyers, telling a story that differentiates the product, and using effective channels of communication (including social media) for disseminating the information. The business structure of such a cooperative could take the form of a public-private partnership where the government (potentially local government as opposed to national government), local and foreign investors, and cooperative members provide the investments and resources necessary to achieve success. The participants then receive dividends from their particular share in the cooperative. However, there may be constraints on how much and how fast wine production might expand given the limits of hard resources such as land for growth of grapes.

Participation in International Wine Tourism and Wine Conferences Cape Verde’s wine producers should be more proactive in finding suitable targets for their wines. Access to consumers is highly dependent on distributors. While there is a tendency to think in terms of finding retail consumers, the producers must think more in terms of finding distributors. Cape Verde is an African country. It should seek distributors who are interested in African wines. These distributors will naturally be found exploring wine conferences in Africa, not in Europe or the United States, even though they may originate from those locations. Cape Verde’s wine producers should therefore participate in wine conferences and exhibitions in Africa and focus not on selling wines for a few days to the consumers who pass through, but instead on developing relationships with distributors who are interested in wines from Africa. In addition, Cape Verde should think of its own backyard as a source of exports as discussed under the topic of vinitourism. Finally, given the country’s dual capabilities in viticulture and tourism, Cape Verde’s wine producers should participate in international wine tourism conferences with a goal of developing relationships with tourism industry operators who can create wine tourism packages aimed at Cape Verde and Fogo in particular.

General Lessons Applicable to Export of Agricultural Products from Cape Verde There are numerous lessons from this case that can be applied to increase the growth of exports from the agricultural industries of Cape Verde:

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• •

• •

• •

The use of cooperatives to organize, coordinate and aggregate the activities of small farmers is a basic essential since the cooperative can be much more effective and thus greater than the sum of its individual participants, but it is not sufficient. Cooperatives should think and act in ways that extend well beyond coordination of output. Technical expertise on a world-level must be applied to the agricultural industries in order to assure that Cape Verde’s producers keep up to date with the worldwide competitive production technologies and developments. Capital must be invested in the industry in order to pre-fund ultimate business results; this is not without risk and thus clear strategic analysis and viable plans must exist for exploitation of global markets. Industry cooperatives should coordinate with certain government institutions to obtain assistance in the leadership areas needed for success. On the global level, Cape Verde is an extremely small player – it is not necessary to think in terms of competing head-to-head in the largest markets against formidable competitors, especially in terms of pricing (the biggest players enjoy economies of scale that Cape Verde could never hope to match because of its limited capacity to produce). Cape Verde’s producers must be more astute and knowledgeable about world markets, especially smaller, niche markets where there may be more realistic opportunities to export its products; this requires strong research and analysis capabilities. Local producers and cooperatives must do an excellent job of marketing. Sale of raw agricultural products to export markets may not be the best or only route to export products since there are two formidable barriers: 1) agricultural products are typically susceptible to spoilage and time is of the essence; 2) competition for raw materials in world markets tends to be based on price, all other things equal, and this is an area where Cape Verde’s producers cannot compete because they lack scale. By-products of agricultural products may better lend themselves to competing in world market niches where differentiation is more likely and where marketing techniques can be effectively applied to attract buyers. For example, does it matter if bananas are exported in the form of raw fruit or in the form of banana bread, if the result is the ultimate sale of bananas into the export market chain? With hundreds of thousands of foreign tourists visiting Cape Verde annually, the tourist market may be a viable way to “export” Cape Verde’s agricultural products and earn foreign currency. This requires a strong marketing capability and partnership with foreign tour operators who can promote the story to tourists in advance of their arrival in Cape Verde. Partnering with entrepreneurs in diaspora communities may represent an avenue for exports to Cape Verdean communities in foreign lands.

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APPENDIX 1 – GLOBAL WINE PRODUCTION

Source: http://faostat.fao.org/

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APPENDIX 2 – GLOBAL WINE EXPORTS

Source: http://faostat.fao.org/

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APPENDIX 3 – GLOBAL WINE IMPORTS

Source: http://faostat.fao.org/

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APPENDIX 4 – GLOBAL WINE CONSUMPTION IN SELECTED MARKETS Region AFR AFR AFR AFR AFR AFR AFR AFR AFR AMS AMS AMS ASIA ASIA ASIA ASIA ASIA ASIA CAR CAR CAR CAR CAR CAR CAR CAR CAR EUE EUE EUE EUE EUE EUE EUE EUE EUE EUW EUW EUW MDE MDE MDE

Country Sao Tome & Principe Gabon TUNISIA Mauritius Benin Congo Ghana Burkina Faso Zimbabwe PARAGUAY Panama PERU Melila Hong Kong Singapore Maldives Mongolia Malaysia Aruba Netherlands Antilles St. Lucia St. Kitts and Nevis Grenada Costa Rica Dominican Republic Puerto Rico (US) Cuba SLOVAKIA ESTONIA MACEDONIA LATVIA BELARUS LITHUANIA ALBANIA POLAND UZBEKISTAN NORWAY FINLAND Faroe Islands LEBANON United Arab Emirates Qatar

2009 2010 Population Annual Liters 000's Per Capita 212,679 13.2 1,514,993 5.9 10,486,339 2.2 1,284,264 2.1 8,791,832 1.2 4,012,809 1.1 23,887,812 0.9 15,746,232 0.6 11,392,629 0.5 6,995,655 5.2 3,360,474 2.0 29,546,963 0.6 73,400 14.8 7,055,071 6.5 4,657,542 5.5 396,334 2.5 3,041,142 0.6 25,715,819 0.5 103,065 12.9 227,049 12.3 160,267 9.0 40,131 4.1 90,739 3.1 4,253,877 1.3 9,650,054 1.0 3,725,000 0.6 11,451,652 0.6 5,463,046 11.9 1,299,371 10.0 2,066,718 6.3 2,231,503 5.7 9,648,533 5.5 3,555,179 5.3 3,639,453 5.0 38,482,919 2.1 27,606,007 0.7 4,660,539 14.7 5,250,275 11.5 48,856 6.3 4,017,095 3.5 4,798,491 2.8 833,285 1.7

3-Year Annual Growth 4.8% 0.5% 1.7% 1.4% 50.1% 29.5% 35.5% 78.4% 953.4% 1.7% 14.5% 16.5% 7.6% 95.0% 1.8% 21.7% 44.6% 69.8% 22.4% 30.6% 9.2% 42.6% 14.4% 6.4% 8.5% 37.1% 22.9% 5.7% 30.0% 4.0% 7.6% 0.0% 5.0% 0.0% 14.0% 2.0% 2.7% 8.4% 2.2% 3.7% 31.9% 32.8%

Source: Trade Data and Analysis (TDA) – International Trade Administration – US Government

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Chã Wines