Lockdown regulations were the worst possible news for the local wine industry and will likely have a severe impact beyond the next few weeks, says wine producers body Vinpro.
Grape and wine production is one of the largest export-orientated agricultural value-chains, with a contribution of R49 billion to GDP.
Police Minister Bheki Cele announced that during the 21-day lockdown there would be no buying or selling of alcohol, nor the transport of liquor “between two points”.
Harvesting and cellar processes were also forbidden.
Rico Basson, managing director of Vinpro, says the industry is extremely disappointed with the regulations. He says they contradict earlier verbal commitments from national departments, and has undertaken to lobby with government.
On Friday it was announced that the industry would be allowed to complete the harvesting process of wine grapes and the cellar procedures, as long as the necessary hygiene and safety of workers are maintained. However, the export of wine, while not expressly forbidden, is hitting a glitch because of the ban on the transport of alcohol.
Maryna Calow, communications manager of Wosa, which markets SA’s wine exports, told Fin24 the industry continues to try to enable wine exports to take place during the lockdown period.
Wine marketing consultant Emile Joubert says that the coronavirus pandemic could not have happened at a worse time for the South African wine industry.
The wine harvest started in January and the local industry got ready to go and showcase what it has to offer at the largest wine show in the world – ProWein in Germany in March.
“The SA wine industry was confident that ProWein 2020 would be a game changer for the local industry after its wine exports declined by about 30% in 2019,” says Joubert.
“Wines of South Africa (Wosa), which promotes SA wine exports, planned to engage there with the international wine market and give new direction to the SA wine industry.”
A few weeks before the event, however, it was cancelled due to the spreading of the coronavirus in Europe. Then wine exports to China stopped due to the coronavirus impact on the halting of trade.
Orders dropping off
“We then started getting messages from customers in the UK, Germany, Belgium and the Netherlands that the coronavirus spreading was getting serious in Europe,” says Joubert. “Orders from Europe started dropping off.”
On top of that, about three weeks ago a Dutch wine tourist to the Cape Winelands tested positive for the virus, prompting a large number of wine farms to put themselves in voluntary quarantine.
Just how important wine exports are for the local industry is demonstrated by the fact that it makes up 60% of the market of the local industry.
“The major issue for the SA wine industry at the moment is the export market. No exports are happening. One local producer has been trying for three weeks not to get a shipment out of SA,” says Joubert.
“At the same time, overseas orders have been cancelled or postponed due to the impact of the coronavirus pandemic on, among other things, the hospitality industry. That is the trend at the moment.”
Calow told Fin24 that about 20% of the vines must still be harvested. Then the grapes need to be pressed and go through the fermentation process before the bottling process.
She says it is a very hands-on process at wine cellars, and one which is in any event subject to stringent hygiene controls. She expects this will now be ramped up even more due to the coronavirus pandemic.
She says exports are very much up in the air.
The China factor
“We saw in January when the initial outbreak increased in China that their ports were closed and a lot of our wine orders were cancelled. Some of the shipments were already on their way there and had to turn back,” she says.
She adds that China is one of SA’s top-10 wine export markets and she is cautiously optimistic that once Asian economies start to pick up again, there will also be a rebound in their demand for SA wine.
“I am aware of some local producers who have, during the past week, received new orders from China,” says Calow.
“What is going to happen in our Western wine export markets is still up in the air. The current situation is creating a lot of insecurity for the local wine industry. We just have to follow what happens as the consequences of the pandemic unfolds.”
She says the plan is to try to resell the wine from orders that were cancelled and also to try and obtain new orders once a rebound happens overseas, hopefully in the second half of the year.
As for wine tourism, an important part of the local wine industry, Calow says the 21-day lockdown will have a much bigger impact than the two weeks of precautionary quarantine a number of wine farms endured due to the Dutch tourist’s visit. The lockdown comes during a time when it is still high season for the wine tourism industry.
As for potential job losses, she explains that the wine industry provides about 290 000 jobs, mostly labourers and most of them seasonal workers. Since the harvest is nearing its end, most of the casual labourers would by now already have received their wages.
As for the permanent workers, she foresees that the UIF relief made provision for to try and mitigate the impact of the lockdown, will certainly help. On the other hand, she foresees more job losses among staff at restaurants situated on wine farms. These are often contracted out by the farmers.
Jacques Roux, marketing director of DGB, says at Bosehcndal near Stellenbosch, one of the oldest wine farms in SA, harvesting is 95% done and would have been completed by the middle of April at this stage.
“Load shedding was the only issue. You cannot imagine how that can wreak havoc with a full press or a cooling tank,” he says.