May 6, 2020

Hope for South Africa’s Wine Industry Pours in

The R47 billion wine industry has unfortunately been affected by the current crisis and the restrictions resulting from the national lockdown. However, hope is growing for its recovery, especially with wine producers now being able to operate and export once more under Level Four of the lockdown. 

Mynard Slabbert, Co-owner and Head of Business Development at the Michelangelo International Wine & Spirits Awards, says: “We are thrilled that the industry will be allowed to export its stock. Not only will this help to save jobs but will also enable the industry to contribute to the country’s ailing economy. In 2018/19, the industry exported 51% of its stock and we are optimistic that this figure will increase, especially with demand and consumption remaining healthy in markets like the UK and US. South Africa is already the ninth largest wine producer in the world and perhaps now we might  move a few places up.”

Government is also aiding the industry and is set to provide approximately R6 billion in short-term assistance. Additionally, thanks to lobbying from Vinpro, the South African Liquor Brand Owners Association (Salba) and the Beer Association of South Africa (BASA), on behalf of the liquor industry, payment of excise duties due in May 2020 and June 2020 will be deferred by 90 days for excise compliant businesses. This dispensation was requested to relieve financial pressure on cash-flow due to a lack of revenue in the local market during the lockdown period. 

The industry too has come to the fore with solutions. “Over the past few years, local producers, distributers, and suppliers have become more agile and innovative. The lessons learnt from  previous periods of difficulty are now being applied to our current situation with industry players identifying gaps and opportunities, which have seen a range of consumer-orientated initiatives being launched,” says Slabbert.

For instance, with consumers currently unable to visit tasting rooms, some well-known wine farms and personalities have launched innovative ways to engage with their customers via virtual wine tastings. Online tastings are being held all over social media by the likes of Cap Classique, Delheim Wines, Simonsig, Waterford, Avondale and Baleia Wines, offering consumers the perfect opportunity to become oenologists and make more educated buying decisions in the future. Several wine farms and retailers have also initiated ‘order now, redeem later’ programmes to help keep wine sales ticking during the lockdown, with some outlets offering discounts of up to 60% on fine, Stellenbosch-based wines.

Slabbert continues: “We are hoping that these initiatives will keep consumers excited and engaged with local producers. Additionally, our experience during the 2017/18 drought has shown that South African wines tend to retain their value in times of trouble. For example, although the drought period saw wine production slowing down from 968-million litres in 2015/16 to 824-million litres by 2018/19, the period simultaneously saw an increase in the value of wine sales, which grew by 27.7% between 2015/16 and 2018/19 from R3.9-billion to R5.4-billion.”

For Slabbert, the hope is that these initiatives will showcase the wine industry’s metal and ultimately build investor confidence: “It is inspiring to see how South African producers are being proactive about the situation and taking matters into their own hands. With the wine industry contributing 1.3% to the country’s GDP, it is imperative that we find innovative solutions to any problems so we can continue to attract investment. As Africa’s largest and only international wine and spirits competition, our aim is to support local wine producers in their quest to expand and overcome challenges. We call on all South Africans to assist us in doing so, by supporting our producers and one of our country’s oldest and most esteemed industries,” concludes Slabbert.

For more information about the Michelangelo International Wine & Spirits Awards, please visit Maiwsa.