What a week it has been in the Winelands! While the cold weather and snow-capped mountains are what the vine wants, an unexpected reintroduction of a ban on all liquor sales, announced by President Ramaphosa last Sunday night, made it an exceptionally chilling week for everyone in the wine industry- with immediate effect…
Still trying to recover from the two month ban earlier this year, the staggering news with its wide-reaching impact, had me chatting to Louise Burgers, Publisher Editor and Co-Founder of RetailingAfrica.com, about the impact on the industry.
I share an extract from her article below, but please read the complete story, On the rocks: Liquor industry faces losses of R10bn monthly in sales, with more disturbing statistics and interesting insights.
Well-known winemaker, Hein Koegelenberg, CEO of internationally recognised South African wine brands La Motte and Leopard’s Leap, and chairman of the Board of the Franschhoek Wine Valley Association and chairman of L’Huguenot Wines (the first investment by China in South African winelands), said after the devastating Cape drought, the outlook for the wine industry was very good. Now, he said, he was cutting his production by 50% after Sunday night’s announcement.
“The reality is, I’ve lost international listings and now sales in South Africa under the first prohibition. We don’t know how long this second round of prohibition will be, but indications are that it could be two to four months. We just don’t know. From a production point of view, I’m sitting with way too much stock in my system… So, planning will be crucial and we will have to produce up to 50% less.” The 2020 harvest is in the cellar, but bottling and production forecasts are dramatically down as they will probably sell only two thirds of what they would have sold this year – and that is if the ports backlog is cleared and they can get their wines to the international market for export. “All of this will have a serious impact on what volumes we can harvest in 2021”.
“I’ve lost big listings in Germany; I’ve lost the Sainsbury listing. So, after this period, if I can export, if I can get the containers on the boat, we will probably sell two thirds of what we would have sold,” Koegelenberg said. He fears that all the brand building that has gone into the wine industry will be lost; as in the next 12 months to two years in a depressed economy, wine will be seen as a commodity and pricing and deals will determine buying patterns, not brand loyalty. “We’re in for a rough ride as brand builders. We, as wine people, sell experiences, as part of our wine sales. We see wine as part of food. We are not in the category of people misusing alcohol.”
He called on Government to work in partnership with the wine industry to safeguard wine tourism, instead of imposing punitive measures. “This will hurt not only the winemakers, but the entire industry, its communities, the staff employed, the entire winelands tourism business. This is devastating. Agriculture and tourism are the two things that South Africa can sell. There are no winners in this war. Whatever we need to do to survive, we need to do that. Keep your good people and do what you can to survive.”
While Government’s reasoning to secure hospital beds for Covid patients, is easy to understand, the impact of the ban affects much more than just the enjoyment of liquor or the effects of substance abuse. According to Louise’s article, the lockdown on liquor “will have catastrophic consequences for the liquor industry and its entire supply chain and production pipelines in South Africa, leading to losses of R10 billion in lost sales for every month lockdown prohibition continues.”
I can’t help but agree with a quote by Matthew Leighton of OneDayOnly: “Our thinking was: let people order and deliver to their homes. As far as we are concerned, all alcohol sales should be handled this way under lockdown. The solution lies in shades of grey… not in destroying an entire industry.”