The wine industry is in trouble

‘Lift ban now or it’s game over for wine industry’

“We are fed up with the situation,” says Vinpro chairperson Anton Smuts

The wine industry is close to breaking point. “Enough is enough,” says Rico Basson, managing director of the wine industry body Vinpro about the liquor sales ban that has now officially crippled the industry.

In a desperate last plea released by Vinpro moments ago, the wine industry again warns that tens of thousands of employees will soon be left without any income if trade restrictions are not lifted soon. It says, if this does not happen it will simply be game over for the industry.

Basson says many businesses have already closed down permanently due to the alcohol ban. He is again calling on government to save the lives and livelihoods of people working in the industry.

“If you think about it rationally, the ban doesn’t make sense anymore. We have done our utmost to save lives, however, the time has come to now save the livelihoods of the people who work in and depend on the South African wine industry.”

Basson says the industry understands that the current situation remains extremely complex given the challenges presented by the covid-19 pandemic. However, he believes there is absolutely no reason to keep the current ban on wines sales in place.

“The South African wine industry, including wine tourism, is in a state of disaster. Urgent intervention is needed or else one of the oldest agricultural industries in the country will not survive.”

Vinpro has been in frequent deliberations with government since the lockdown was first announced in March 2020. It says it supports the Western Cape government’s call for the safe reopening of all businesses. This includes the reopening of the domestic sale of alcohol, with targeted interventions.

Western Cape premier Alan Winde says in a recent statement: “For as long as the Western Cape can assure access to health facilities for all Covid-19 patients, the temporary ban on the sale of alcohol should be lifted immediately, in conjunction with the implementation of smart interventions to curb the negative impacts of alcohol over the medium to long term.”

Alan Winde

Basson adds that they support government’s efforts in saving lives by empowering the wine industry to adhere to all regulations with the necessary information on safety protocols. However, he also states that saving lives needs to be in careful balance with saving the livelihoods of people.

Wine is an agricultural product that is seasonal, which means that vines do not wait for trade restrictions to be lifted before they produce grapes. “Our producers are already preparing for the 2021 wine harvest. However, with close to 300 million litres of surplus wine still in cellar tanks, we might not have space for the new crop. The situation is dire,” Basson says.

While many view legal action as the most effective means to reopen trade, Vinpro believes otherwise. The wine organisation says that urgent and productive discussions affecting the industry are taking place at a high level directly with government, business, labour and civil society through the Nedlac forum.

In light of this, Vinpro together with the rest of the alcohol industry, have been working towards establishing a new social compact. It explains, “A social compact is an agreement between various parties, not a one-sided concord. It’s a give and take and currently we are frustrated with government’s lack of a commitment on the next action steps.”

The question of whether local liquor sales will be opened up when the current advanced alert level 3 is re-evaluated from 15 August onward, will be a make or break decision for the wine industry.

The initial nine-week ban on local sales, and five-week ban on exports will result in more than 80 wineries and 350 wine grape producers going out of business. A potential loss of more than 21 000 jobs across the value-chain over the next 18 months are also on the cards and this may escalate significantly following the second ban.

‘The ban has served its purpose’

Vinpro chairman Anton Smuts.

Vinpro chairman Anton Smuts says the wine industry is dominated by smaller businesses. Fourty percent of farmers produce less than 100 tonnes and a further 36% less than 500 tonnes per year – of which the majority do not have sufficient bridging finance to get them through the financial drought.

Smuts says as the one of the oldest agricultural industries in Mzansi their grapes are cultivated by 2 873 farmers and their 40 000 employees. Furthermore, the industry’s wines are crafted by skilled winemakers and their assistants in 533 wineries, with many more input suppliers and service providers in the value-chain being dependent on the market reopening.

For every single job on a farm, a further 10 jobs are created in the rest of the value-chain.