South African wine industry facing devastation

The South African government has banned domestic wine sales and shut down wine exports, leaving the industry haemorrhaging money. Felicity Carter reports.
 

Cape Town/Photo by Matthias Mullie on Unsplash
Cape Town/Photo by Matthias Mullie on Unsplash

Wine producers in the Cape are reeling after the South African government announced a ban on transporting alcohol that has effectively shut down wine exports. The wine industry is already suffering a steep fall in income, as alcohol sales are prohibited during the lockdown.

“It is obviously completely devastating,” Andrea Mullineux of Mullineux & Leeu Family Wines told Meininger’s. Mullineux, who was named Wine Enthusiast’s 2016 International Winemaker of the Year, added that, “the decision to prohibit exports will push us to the very edge of survival.”

The national lockdowns, announced by President Cyril Ramaphosa in late March, banned both the sale of alcohol, and its transport “between two points” – which instantly made it impossible to move wine to the ports. VinPro, the wine producers’ association, lobbied the government for the right to send its products to airports and harbours and, on 7th April, the government agreed. It revoked that agreement on 16th April. 

Wine exports stopped immediately, jeopardising sales of more than $9.3m.

Why the ban?

Alcohol has always been a fraught topic inside South Africa, given the history of paying some workers in alcohol instead of money, leading to widespread alcoholism and babies born with foetal alcohol syndrome.

According to the BBC, alcohol also drives some 34,000 trauma cases a week to South African emergency departments. Since the ban on alcohol went into effect, that figure has fallen by almost two thirds, to about 12,000 admissions – which means more hospital beds are now available for coronavirus patients. South African doctors are also concerned that heavy drinkers may be hit particularly hard if they become infected.

But the BBC also reports that security forces have used the bans as an excuse for police brutality; a man was allegedly beaten to death after he was caught drinking in his own yard. Police minister Bheki Cole was also quoted as saying that his forces would “destroy the infrastructure where the liquor is sold”.

Paradoxically, the ban on alcohol could also result in organised crime getting involved.

Meininger’s contributor Michael Fridjhon said that during the week that exports were permitted, “a container of wine was hijacked between the KWV’s warehouse and the port. It is believed that this may have been the result of an insider tip-off.”

Fikile Mbalula, South Africa’s Minister of Transport then issued the following statement: “Concern was raised about the unintended consequences of allowing transportation of wines in the light of the fact that movement of alcohol remained prohibited. These include the criminality that has reared its ugly head in the form of burglaries and theft of alcohol.”

Fridjhon said that the wine industry has offered to hire private security firms to protect the wine en route, but the government has not responded.

The likely result

The ramifications for the South African wine industry, which employs some 290,000 people, are enormous. According to VinPro, nearly half of South Africa’s wine is exported.

“The uncertainty created by the short-sighted banning of exports places in jeopardy an industry supporting many hundreds of thousands of workers,” said Mike Ratcliffe, chair of the Stellenbosch Wine Routes. “It further places at risk the decades of work that went into building market share in our export countries.”

Siobhan Thompson, CEO of Wines of South Africa (WOSA), said that “we are deeply disappointed and shocked at the approach that has been taken by the government to allow exports to resume and then stopping them a few days later.” She said the move has adversely impacted South Africa’s international reputation, and that it has “placed a severe strain on the future competitiveness of the industry and will result in the de-listing of many South African wines on the shelves abroad.”

Maryna Calow, WOSA communications manager, told media outlet fin24 that the wine industry is losing about ZAR175m ($9.23m) each week of the lockdown. She added that WOSA is “pursuing legal routes” and pointed out that truck hijackings also happen in normal times in South Africa.

“The wine business is tough, as it is a super competitive global industry, and in normal times we receive no subsidies or support from our government,” said Mullineux. “Added to this is the four-year drought that we are still dealing with, causing much stress to our yields and production. So, at the best of times, it is a marginal industry.”

Wine is the Western Cape’s most important export, said Fridjhon. “A decline in South Africa’s share of shelf space seems inevitable: The Western Cape’s Ministry of Agriculture has estimated that a 5% loss of market share will translate into 15,000 job losses.”

Felicity Carter

 

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