Challenges Faced by the South African Wine Industry

Kristina Beuthner discovered her passion for wine through a glass of German Riesling sparkling wine. Since then, her career has soared, serving on global tasting panels. In this article, she shares insights about the South African wine industry!

The national lockdown led to a 5-week export ban and a 19-week ban on local sales (20% revenue loss for 2020). This has placed tremendous financial strain on South Africa's wine industry.

South Africa's illegal alcohol market now constitutes 12% of the R177 billion industry, with bans during the pandemic boosting this illegal trade. Every 4.5 liters sold is illegal!

The Citizen newspaper reported on May 31, 2021, summarizes SALBA's figures relating to alcohol bans: 200,200 jobs at risk; R36.3 billion revenue losses; a GDP annual loss of R51.9 billion; and R29.3 billion tax losses for the government.

Earlier this year, the government increased excise tax on alcohol by 8%. This increase followed a 16% wage hike and a 15% spike in electricity costs that must be absorbed by businesses.

FEDHASA estimates that 30% of restaurants were forced to close at the peak of last year's lockdown. Many restaurateurs are now struggling.

A Look at the World:

In early April, the wine world in France entered a frost nightmare, with early estimates indicating that 30% of the 2021 harvest was destroyed. This severe freeze, along with the economic recession, put winemakers and farms in a state of crisis.

At the recent US-EU summit, tariffs on wine were once again in focus. The world economies are interconnected.

For South Africa, wine exports rank as the third most important export, according to WESGRO (after refined petroleum and citrus fruits). Between January and December 2020, South African wine exports to the UK were successful, as buyers tended to prefer higher-quality wines, leading to a 28% increase in the value of bottled wines.

Time to Stay Motivated and Refocus:

Vinpro declared the 2021 vintage as of "consistently high quality," and the harvest was about 8.9% larger than in 2020.

Here are two winemaker perspectives: Ian Naudé says, “I love the diversity we have in South Africa. The people, soils, and microclimates support diverse grape varieties.” Marco Ventrella from www.kwv.co.za states, “We make wine.”

Now is the time to stand up for your rights and fight! Vinpro consults with the government, and despite slipping to Level 3 (and unfortunately Level 4), a more risk-based approach is being adopted.

Changing Perspectives:

"I think in generations," says Eric Heerema from Nyetimber Vineyards, Sussex, England. This can also be a strategy for your staff: Don’t dismiss, but rotate instead.

Vivino’s Heini Zachariassen recently said in a presentation: Collaborate with your competitors to enhance South African wines!

These ideas are vital to propel the South African wine industry back on track!