Wine industry: Ban lifted a little too late

Businesses across South Africa are relieved that after five months President Cyril Ramaphosa has announced a more appealing easing of the Covid-19-induced lockdown regulations – but for many the move has come too late.

Theo de Jager, chair of the Southern African Agri Initiative (Saai) board of directors, says there has already been a bloodbath of jobs in the wine industry, with production for 2020 and 2021 also severely affected by the lockdown regulations.

“Overflowing cellars have no storage capacity in tanks and barrels, and have already notified producers that they are unable to allocate 2021 quotas,” he says.

“A farm cannot be closed down for a year, and very few family farmers are able to survive two consecutive years’ loss of income or turnover.”

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The call for job creation …

De Jager says it is “very strange indeed” for government to be calling for new job opportunities to be created while farmers and rural businesses are struggling to retain existing manpower – especially following cries of distress addressed to government since May to give businesses that have been “choked to death” some breathing space.

“The rural business sector’s confidence in the government has been shattered by its unpredictability, recklessness and irrationality, to such an extent that it will take a long time for investments to back new job opportunities again,” he says.

Rico Basson, managing director of wine industry organisation Vinpro, echoes these sentiments.

“Although we are grateful to start trading and delivering online sales again, we are dismayed at the extent of the damage caused to our industry during the temporary ban on exports and extended restrictions on local sales,” he says.

“It might be too little too late. Many wine businesses have already closed down and a long road to recovery lies ahead for the industry as a whole.”

The sector is believed to have lost more than R7 billion since the introduction of sales restrictions in March. The alcohol industry as a whole contributes about 3% to GDP.

Following the initial nine-week ban on local sales, the five-week ban on exports, and the second domestic sales ban, Vinpro estimates that more than 80 wineries and 350 wine grape producers will go out of business over the next 18 months, with the possible loss of more than 21 ,00 jobs across the value chain.

Recovery plan

Vinpro says it has however been working closely with industry partners on a disaster recovery plan to address the urgent need to stabilise the sector.

This includes the extension of further excise relief for the current year as well as the 2021 season, addressing bottlenecks and challenges at the Port of Cape Town, and formulating solutions to reduce a current wine surplus of around 300 million litres.

Basson says the industry is committed to ramping up its social awareness programmes and behavioural change interventions.

These include vigorous responsible messaging and a mass communication campaign aimed at helping communities in the fight against the spread of Covid-19.

“We reiterate our commitment to partner with the government to create a social compact that drives behavioural change regarding the use and consumption of alcohol,” he says.

“We call for the establishment of a national multi-stakeholder forum with government and civil society to focus on identifying and prioritising problem areas – based on research and credible current data – and jointly designing interventions targeting these key areas with enhanced current programmes and new measurable and evidence-based initiatives.”

This article first appeared on Moneyweb and was republished with permission.

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