Why South Africa’s wine farms are on their knees

Malu Lambert

05 August 2020

With the ongoing curfew and ban on alcohol sales, the South African wine industry is experiencing seriously challenging times. Malu Lambert offers an on-the-ground report

The image is haunting; a 1,000-seater, 200m-long table stretches along a dirt road on Bosman Family Vineyards, in the heart of Wellington. Its white tablecloth stark against the rural scene, empty seats as far as the eye can see.

The table was set up to highlight job losses in the tourist, hospitality and wine industries on the back of the on-going coronavirus restrictions, most importantly the ban on the sale of alcohol and the curfew of 9pm (which has recently been changed to 10pm). That table was a silent, peaceful protest in solidarity with the nation’s restaurants which, on 22 July, carried tables and chairs out into the streets of Wellington to highlight the plight of the industry, with the cry of #JobsSaveLives.

That table was a silent, peaceful protest in solidarity with the nation’s restaurants which, on 22 July, carried tables and chairs out into the streets of Wellington to highlight the plight of the industry, with the cry of #JobsSaveLives

Vinpro (a non-profit wine body representative) has reported that the South African wine industry’s GDP contribution to country’s economy is more than £2.17bn (R49bn) per annum and it creates 290,000 job opportunities directly and indirectly. And if we account for the knock-on effect on the entire supply chain, something closer to half a million jobs were at stake.

How it began

The first ban took place late March, when the country went into Level 5 lockdown, but citizens were given time to stock-up on alcohol products. There was an air of good sportsmanship: the plan was 21 days total lockdown – we were to stay inside to save lives. People went off to the shops, stocked up on wines and started planning their Netflix schedule.

But that mood quickly turned when it was revealed that wine farms couldn’t continue with harvest (despite being at the tail end at the point) and they also couldn’t export.

Eventually wineries were allowed to finish picking their fruit. Twenty-one days came and went, and finally Level 4 arrived. Alcohol sales were still banned, but exports were granted.

At this point the figures were already dire. Vinpro managing director Rico Basson reported that the wine industry’s loss of revenue on exports alone was £8.85m (R200m) per week since the lockdown and about £13.27m (R300m) in local market sales.

The majority of South Africa’s wine farm workers are permanent (approximately 90%). Furthermore, vineyard workers usually feed around four family members each, so these job losses result in a serious socio-economic challenge

And jobs were being lost. Unlike most other wine regions, the majority of South Africa’s wine farm workers are permanent (approximately 90%). Furthermore, vineyard workers usually feed around four family members each, so these job losses result in a serious socio-economic challenge.

No time to breathe

There was a brief respite in June. The alcohol ban was lifted, but with restrictions: sales were only allowed Monday to Thursday, and during certain hours. Then on 12 July President Cyril Ramaphosa took everyone by surprise, and reinstated the ban with immediate effect, leaving people no time to stock-pile, and businesses no time to react.

‘More than 80 wineries and 350 wine grape producers are estimated to go out of business with a potential loss of more than 21,000 jobs across the value chain over the next 18 months,’ warned Wanda Augustyn of Vinpro.

Sadly, it wasn’t too long until the cards started to fall. A Swartland wine grape farmer anonymously reported that a worrying number of large producers were cancelling their contracts with grape growers. Meanwhile, multinational brewing and beverage company Distell, reported that due to the ban, they’re going to have a wine surplus of 300m litres this season – nearly the equivalent of an entire year’s worth of domestic wine sales.

And it’s not just about what’s inside the bottle. Glass manufacturing firm Consol Glass have just suspended a £66m (R1.5bn) investment in Ekurhuleni, Gauteng, due to the reduction of the demand for glass products.

Opportunist crime is definitely on the rise. A handful of retail shops in my town have been looted, and we personally have had three break-ins in six days in our cellar. With the first two it was evident they were looking for cash, on their third go they carted out a wheelbarrow full of wine

Francois Haasbroek

Winemaker Francois Haasbroek is experiencing the devastating consequences first-hand:  ‘Distributors and retailers reliant on imports such as glass, additives, corks, paper-stock, capsule and so on, either have issues getting stock, or the products gets stuck in customs and harbours. The majority of suppliers have cut all their imports to the bare minimum or none at all, simply not being sure if there is a market for their goods.

‘People are also getting desperate; opportunist crime is definitely on the rise. A handful of retail shops in my town have been looted, and we personally have had three break-ins in six days in our cellar. With the first two it was evident they were looking for cash, on their third go they carted out a wheelbarrow full of wine.’

Haasbroek highlights that the main issue with the ban is that ‘there is no timeline connected to it’, which impedes businesses from developing any viable plan of action.

‘From a business point of view we have to plan expenditures. How do you plan your cash flow? No one has any idea how far they have to stretch out their resources before it dries up.’

There are murmurings that the ban could be lifted in a few weeks, but the damage has most certainly been done.

Photo credits: Hannes Maritz

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