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South African wine industry recovers gradually from COVID-19 show down

South African wine industry recovers gradually from COVID-19 show down

South African wine industry
South African wine industry recovers gradually from COVID-19 show down—

The South African wine industry will still take a few years to fully recover from the blow dealt to it by the Covid-19 pandemic – but the first green shoots are there.

This is according to Rico Basson, managing director of local wine producers’ body Vinpro.

SA’s wine industry is a key economic contributor, especially in the Northern and Western Cape. According to John Hudson, national head of agriculture at Nedbank, it contributes a significant R55 billion to the local economy and employs close to 269 000 people.

To survive and thrive, the sector must secure a premium positioning in the global market, focus on inclusive growth and strive for environmental and financial sustainability, Hudson believes.

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Through a necessity to revive, recover and rebuild, wine businesses are undergoing a mind shift in the way they do business and the industry has fast-tracked tools aimed at becoming more robust, adaptable, competitive and sustainable.

This was the message at the 16th annual Nedbank Vinpro Information Day, which was attended by close to 450 virtual and in-person delegates last week. “The wine industry still faces harsh realities while recovering from the after-effects of Covid-19,” said Basson.

Glass shortages, export and import challenges at Cape Town harbour, the contrast between a 15% spike in farm cost inflation and a 3% to 5% wine price increase, as well as a growing illicit market, are some of the issues that have a significant effect on the entire wine value-chain.

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Despite challenges, the industry has managed to reduce the uncontracted wine stock from 200 million litres at the end of 2020 to 60 million litres at end 2021 – in part by allocating wine grapes to grape juice concentrate.

This – along with an estimated smaller wine grape crop – may relieve downward price pressure. Wine export volumes and value have also shown good growth in 2021, particularly in traditional markets such as the UK, while diversifying into the US, China and the rest of Africa.

“While we commend our producers and cellars for their resilience and tenacity, without innovation we cannot move forward. The wine industry has a clear growth path towards 2025 which will, in close collaboration with relevant government departments and other stakeholders, create an environment for recovery and growth,” said Basson.

Ronald Ramabulana of the SA Wine Industry Transformation Unit said during a panel discussion that a lot more work needs to be done to support black-owned wine brands. At the same time, he is encouraged by changing demographics in the industry, especially with more women-owned wine brands.

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“Trying to break down barriers to entry along the entire wine industry value chain requires much closer partnerships between government and industry as well as skills development,” said Ramabulana.

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