wine industry

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Running dry: Will COVID-19 kill South Africa’s wine industry?

COVID-19 has turned the world upside down and shaken out its pockets. Every industry has been affected in one way or another, but the one that is taking the greatest hit is the wine industry.

wine industry

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What began as a five-week ban on alcohol, as well as the exportation of wine has now turned into a nine-week saga and counting, and the industry is on its knees.

South Africa was the only country to have imposed a ban on sales of alcohol during the lockdown, as well as exports of South African wine, resulting in the loss of almost R1 billion in revenue.

To date, that figure has increased to over R5 billion due to losing R300 million a week from local sales alone and continues to grow. This figure does not include related suppliers who are also in limbo due to the ban, such as bottling and labelling companies.  

Wine industry shutdown causes massive job losses

Job losses run into the thousands – of the almost 300,000 people that work in the industry, over 20,000 have lost their jobs, and it is predicted that more than 80 wineries and over 350 wine grape producers will have to close their businesses in the next year.

Although wine exports have been allowed to continue during this time, the damage has already been done. Many exporters lost their spaces on supermarket and wine store shelves overseas during the first ban due to not being able to deliver. When the ban was lifted and exports allowed again, there was such a backlog of services at the harbour that producers weren’t able to deliver on time.

Owner of Diemersdal Wines, Thys Louw said he had lost a lot of his export business due to the brief ban as his company could not make deliveries to overseas clients.

“We’ve lost quite a bit of shelf space and that you don’t get back easily. I mean we’ve worked so hard to get our wine on the shelves in some of the supermarkets abroad,” Louw said.

Over 90% of wineries in trouble

Managing director of Vinpro, Rico Basson said the industry had moved from crisis to disaster.

“The wine industry is sitting on a 300 million litre surplus and an impending harvest, which will add to the challenges the industry already faces,” he said.

Wine expert Michael Fridjhon believes that South Africa could lose up to 90% of its wine producers over the next five years. South Africa’s 530 wineries mostly include small and medium enterprises with an average annual turnover of less than R10 million, and he says that these wineries will not be able to survive.

Knock-on effects

It’s not only the wine industry that is taking a major hit. Other industries directly and indirectly related to the wine industry such as agriculture, tourism, and hospitality. Knock-effects of the second domestic sales ban will include further job losses throughout the value chain, leading to further humanitarian crises such as poverty and starvation.

The future of SA’s wine industry

As with everything happening in the country at the moment, there seems to be no end in sight. The wine industry is currently in talks with the government to try and come up with a feasible solution, however, whatever happens, might just be too little, too late.  

All we can do is wait with bated breath and hope that a compromise is reached that will enable our world-famous wine industry to stay alive.