Stability needed in a long-term industry
In light of this, the fourteenth session of the Agricultural Value Chain (AVC) Virtual Discussion Series focused on the South African wine value chain, and more so its response to the current alcohol ban. Joining Agbiz’s Dr John Purchase were panel members Rico Basson, VinPro; Maryna Calow, Wines of South Africa (WOSA); Beyers Truter, Byerskloof Winery and Hein Koegelenberg, La Motte Wine. A local industry on its knees
The sentiment of all panel members were clear: the decision to once again suspend alcohol sales dealt a devastating blow to the wine industry, which already suffered great financial and job losses due to a ban earlier in the lockdown.
According to Beyers Truter, the industry is under immense pressure and the negative effects are felt across the value chain. His sentiment is echoed by Hein Koegelenberg who explains that the wine industry represents a long-term business and that the effect of the current crisis will be felt for at least the next three years.
VinPro Managing Director, Rico Basson, also paints a bleak picture when he states that already before the coronavirus crisis about 30% of local wine producers did not show any profit. Add to this the 22 000 jobs at risk within the sector and the possible loss of 400 producers (which include niche players), and it becomes clear why Basson is worried about a looming industry collapse. Basson further warns that if the sector does not stabilise in the long-term, it will soon face the brunt of a dire socio-economic and humanitarian crisis.
Positive export market
With the ban on exports lifted on 1 June, indications are that the industry experienced a very positive export cycle in July. According to Maryna Calow, Communications Manager of WOSA, about 38 million litres of wine was exported in July and she remains positive that the export figures will continue to rise over the next few months.
All panel members are in agreement that South Africa produces exceptional wines and that the industry can hold its own amongst its international counterparts.
The way forward
According to Basson, the industry is faced with three main challenges, namely: how to go about to get the ban lifted, to safeguard its reopening and to ensure a better regulatory environment.
The sector has subsequently entered into a social compact with government, industry and labour. Through this three tier approach, the sector aims to enhance the flow of communication between role players. This document is currently being lobbied for political buy-in.
In terms of the regulatory environment, Basson states that targeted intervention programmes are needed and that the industry is ready to engage with government on issues pertaining to, amongst others, drinking and driving; the youth and alcohol and gender-based violence.
Another important aspect, according to the panel members, is the revival of the wine tourism sector. All are in agreement that although this sector is one of the industry’s strongest assets, it will have to be revisited to adapt to the new normal and a post-Covid-19 environment.
If you missed this fascinating discussion, login on Senwes’ website to watch it - http://www.senwes.co.za/en-za/agri-value-chain.