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Wine industry: Ban lifted a little too late

Over 430 wineries and grape producers expected to go out of business in the next 18 months, possibly costing 21 000 jobs.
Cellars are overflowing and have had to notify producers that they cannot allocate quotas for 2021. Image: Shutterstock

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.

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“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.”

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.

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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 21 000 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.

Read: SA’s liquor industry offers to help curb drinking

“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.”

Listen to Ryk van Niekerk’s interview with Andrew Murray of AB InBev (or read the transcript here):

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The ban definitely sucked. But we have some of the best wine producers in the world and South Africans are a dynamic and resilient nation. We will come back stronger than ever!

South Africans are money makers and will bounce back swiftly. We are the best! I love and am really proud of South Africans.

Agree with you. The tax payer (wine producers, farmers etc) who have kept this country going for the last 26 years while the ANC have been sucking it dry will bounce back and soldier on. Not all of them will survive but most will.
However their sentiment towards the ruling masses has changed and I suspect that their tax contribution will also change. Think on that.

What will be interesting will be the number of high ranking officials who will suddenly acquire wine farms and move from traditional beer and skokian, and wax lyrically (clueless) about their new farming or other enterprise. This will have been acquired cheaply at a forced sale for peanuts. Old owners and workers penniless.

This must be a chatbot

Dadape, contact Spacex and book a seat to Mars. You are deluded.

A person this deluded can only be my ex. Cheryl, come back all is forgiven!! Daddy Bear.

The “Industry” will get great support today.

Because of an untrustworthy government and “leader” its best to stock up again to the rafters. Red wine has a great shelf life!

It would be closed again without doubt and in the same “with immediate effect” manner.

Lots of money will be tied up that should have gone elsewhere in the economy.

Covid is playing havoc in the strangest ways.

300 million litres of wine in RSA. X million tons of potatoes in Europe and thousands of tons of chicken brown meat in the US.

How on earth does one create a club to advantage the folk hurting here?

Gina you can’t. Even if you did you would need permits and bribes and in the end most would get stolen and redistributed to those with 4 or 5 rolls on their necks.

Well the plan worked…. now the cadres can pick up a wine farm for a song.

You lucky your comment was posted!

When i recently implied that B&B’s, Game Farms, Hunting, Tourism, Hotels, the ban on alcohol and tobacco was a plan from “council” to target business owned by the “minority,” my comment was deleted

Yet Taxi’s were allowed to operate to full capacity. Your comment carries a lot of water

I said so a little more gently. Not only wine farms but a lot of businesses in general. Transformation or redistribution, what ever floats your boat.

Can’t we make ethanol from the wine like Australia did a few years ago when they had a surplus

Given that it’s a plan from a non cadre, unless you grease palms in a big way of course, it will be brushed aside

Not a bad idea however our cars will be arrested for exceeding the alcohol level and for being drunk

They’ll find any excuse to dismiss an idea that does not benefit the ruling Elite

But, your “nick” might just pull it off!

DON’T FORGET TO VOTE A N C FOR MORE ECONOMIC GOOD POLICIES

Spectacular own goal, but the worst own goal is still ANC corruption, by far.

‘’Let’s have wine and woman, mirth and laughter, Sermons and soda-water the day after’’

Lord Byron, English Poet (1788-1824)

The cANCer party, unfortunately, knew that the municipal election is very far down the road still, or else…..

I read this article early this morning, and really had a lot of sympathy for this industry. Then I paid a quick visit to a few bottle stores and found that the prices took a hike of between 10 and 20 Rand a bottle. Now I wonder, for an industry that sits with two years’ stock, that does not make sense. Maybe Vinpro must take a closer look. Somewhere in the supply chain, someone is taking the consumer for a ride. I did not buy this morning and will probably not buy as long as this is going on. My sympathy is gone.

Cutting your nose to spite your face? Go online, lots of bargains for well-known brands. Support an industry that has suffered greatly under the Corona Circus’ criminal decisions.

Thanks Griet, but I am not desperate. I still have a little stock left.
I think we have all taken our knocks, whether it is in salaries or reducing draw down from your investments to prevent eroding of capital, many of us are in that same boat. My point was simply that, because someone has taken a knock, he should not take me for a ride. I think the people in the industry will do themselves a favour if they sort it out quickly, because we all know that exploitation of the customer eventually leads to customer resistance, which I am sure will hurt the industry in the long run.

It would be interesting to see whether the price hike sits in the bottle store or the wine farm. That bottle store had no income for months and in most cases the stock was bought months ago.

If you want to see an annoyed wine farmer : take him to a restaurant that lists his wine for R295 but the farmer received R125 for the bottle!

But, everybody suffered : the farmer, the bottle store, the restaurant. Most of all, the jobs might not come back 🙁

The more people the country can make poor, the MORE they need their help. SOCIALISM PURE AND SIMPLE. BUT they are BROKE so how do they get help to the people????

Those of us fortunate to have work and uninterrupted salary must support local produces by buying an drinking more wine. It’s our national obligation – 300 million litres to go! Joking… not joking.

End of comments.

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