SA wine industry on its knees

As lockdown set to ease.
Image: Shutterstock

Two years ago, South Africa’s first black female winemaker Ntsiki Biyela watched anxiously as the worst drought in a century scorched vineyards across Western Cape.

After surviving that, Biyela’s small business Aslina Wines recovered and was poised for growth this year – until the new coronavirus pandemic struck, threatening a bitter harvest as domestic and export sales tanked during nine weeks of lockdown.

“We are 30 percent down in terms of exports, but also (local) sales we are down,” she told Reuters at the cellars of Delheim wine estate in Stellenbosch where Biyela makes and bottles her own red and white wines.

“I am anxious that we are not going to grow … but as long as we can survive for the time being,” she said. “Everyone is struggling to survive.”

Aslina’s woes reflect a broader struggle in one of the world’s top ten wine producers. According to domestic industry body Vinpro, it was unlikely to make up the nearly R3 billion in direct revenue lost during lockdown, with export losses alone amounting to R200 million a week.

As well as strangling exports, South Africa’s lockdown, one of the toughest in the world, includes a local ban on the sale of alcohol, although under looser restrictions announced by President Cyril Ramaphosa, booze will be sold for home consumption at certain times starting next week.

Biyela is one of an increasing number of black entrepreneurs breaking into an industry traditionally seen as the preserve of wealthy white landowners who have thrived since South Africa produced its first wine in 1659.

Aslina Wines, named after Biyela’s late grandmother who helped raise her in the rural village of KwaVuthela on the east coast, was founded in 2016 and sells around 36,000 bottles a year mainly to the United States, Japan and the Netherlands.

Its first export since lockdown started in late March is scheduled to leave from Cape Town to the United States on June 1, Biyela said, but demand is down and instead of the usual container load “they are only taking about five pallets which is like half”.

Rico Basson, managing director at Vinpro, said: “It is our estimation that around 80 wineries, with almost 350 producers, could be out of business … that equates to some 15% to 20% of the sector.”

Across the entire liquor industry in Africa’s most industrialised economy, which includes craft brewers, job losses stood at 117 600, he said.

It is unclear whether opening up after two months of zero revenue is enough to save the year.

“The implications already are irreparable,” Basson said.

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Probably said at an NCC meeting:

That’s a nice tourism and wine industry they have there, would be a shame if something was to happen to it.

Sadly, not only the wine industry.

Let’s compile a shortlist (and help me with that) of other “industries” brought to the brink as a result of Covid-19 (not the virus’ fault, but by Govts copying each other, led by WHO)

Most obvious, Restaurants..(and suppliers)
The whole Airline industry (and related support services)
Ocean cruising is dead.
Hair dressers.
Tourism…big one! (and related leisure operators, booking co’s, B&B’s/hotels, game farms.)
Engineering & manufacturing (…wide reaching, deep impact)
Performing arts (incl. movie-theaters)
SPORTing events! (how could I forget that one?)
Any exhibition events / weekend festivals of all kinds (sigh..)
The “business” of religion (sorry to describe it in that way 😉 I meant gatherings.)
Child Daycare centres.
Public Benefit Orgs feeling the pinch.
…even certain hospital groups have reported adverse financial impact (an industry that is expected to benefit)
Burglars have seen reduced midnight “business”.

Point is, one can write trillions of similar articles…just pick MOST industries.

Perhaps, is it time to revive the concept of Drive-in Movie theaters?? (….youngsters kissing each other lying flat on car seats will still be allowed, off course, provided masks are kept on at all times….. Your choice in having a cloth or paper aftertaste. Yuck!)

Just a pity that most of the Accountants, seem to have survived – lots of these ”accountants” end up being financial advisers in one-horse towns or operate as so-called financial advisers in ”mom-and-pops-shops” and are ripping people off, by scare tactics about the Rand.

The Rand could trade at 14 by year-end!

Appreciate your response about your forward view on the ZAR/US$.

Am aware that no-one can predict the future. Has heard other comments that it may recover to around within R15-R16 range again, but “not easily again below R14, as those days are gone” I was told.

This has also a lot to do with Dollar strength & weakness (and EM risk-on & risk-off sentiment that’s driving the local currency as the proverbial tiny cork on the vast “ocean” of global forex flows.

Blessings.

We are strong and resilient! Our wine makers must conquer the world. Thrive!

… all of which is not unique to South Africa, but a problem across EU, UK and America.

End of comments.

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