SA wine producers ‘fearful and frustrated’, losing R300 million per week

South African wine producers are “fearful and
frustrated” due to the ban on alcohol sales during lockdown, as well as the
initial stop-and-go approach government had to the export of wine.

This is according to Nicolò Pudel, co-founder of
Port2Port.wine, a South African online wine retailer carrying over 2 000 wines
from 400 producers and 11 countries.

Pudel says he has observed this state of mind among many
local wine producers in recent weeks, with some indicating that they may be
forced to close shop indefinitely due to the impact of the lockdown.   

Wine producers’ industry body Vinpro said on Friday that the
lack of income from domestic revenue streams – over R300 million per week – had
undoubtedly already placed several businesses in dire straits, and would lead
to thousands of job losses if the matter were not resolved urgently.

Vinpro is still in talks with government to clarify local
liquor sales during Level 4 and beyond.

Dirk Harris, exports expert at the Michaelangelo
International Wine & Spirits Awards – one of Africa’s biggest wine
competitions – says he believes SA wine producers understand the reasons for
the lockdown, but also argue that alcohol sales can be regulated in a
practical, responsible manner that will not result in such a dramatic loss in
tax revenue.

“It is tricky, but the economic effect of not allowing
local alcohol sales is devastating to wineries. They also employ a lot of
people,” says Harris. “Wineries are trying to export as much wine as
possible since they cannot sell on the local market, on which they normally
rely heavily.”

‘Real and dramatic’ concerns

Pudel expressed concern over wineries with limited cash
flow. ”

The fear of a further extension of lockdown or an extension of the
alcohol ban no matter what, is real and the situation is dramatic,” he
said, adding that in his view, the wine industry was suffering disproportionately
compared to other countries.

“Overseas producers are able to at least focus on their
direct-to-consumer and retail efforts,” he said.

Future survival

As the lockdown persists, some wineries have started making
hand sanitiser to get an income during lockdown.

Pudel believes wineries will see a spike in direct sales once
sales are allowed, and that online sales may continue to grow in future. In the
meantime, Port2Port is allowing consumers to purchase wines during lockdown for
delivery once regulations allow for it.

“I think there will be a shift toward direct and online
sales. I think this will be a great advantage for wineries in the long term,
benefitting from higher margins, having control on product placement and owning
customer data,” he said.

Another trend foreseen due to the greater emphasis on health
brought about by coronavirus concerns, is an increased demand for organic wine.

According to Frank Meaker, cellar master at Org de Rac, an
organic wine farm in the Swartland region of the Western Cape, its export
markets are indicating that the demand for organic wine and food will reach new
heights as a result of the way Covid-19 has changed the world and the needs of
the consumer.

Dr Morné Mostert, head of the Institute for Futures Research
at the University of Stellenbosch Business School, says any crisis leads to an
immediate exacerbated reaction. What the coronavirus crisis has done,
therefore, is to very suddenly raise huge concerns about personal health among
the world’s population, resulting in people revisiting their eating and
drinking habits.

“The window does not last forever, as humans have
proven to drop their initial concerns and go back to their former habits. But
what is definite is the current existence of this experimental consumer looking
at ways to improve health through, inter alia, organic products. And thereby a
unique opportunity has opened up to garner new consumers,” says Mostert.

Canned wines – a move for sustainability?

Mulderbosch Vineyards, which currently exports most of its
production, trades actively across Europe and the UK, and increasingly in the
East. It views North America as a key growth market.

Mulderbosch Vineyards CEO Chrianto Oosthuizen says worldwide,
there is a growing recognition of, and support for, the sustainability and
convenience of wine in cans.

Mulderbosch plans to introduce canned wines to local and
international markets in the near future.