One of South Africa’s oldest agricultural export markets and still one of the country’s strongest commodities abroad is reeling from the Covid-19 lockdown regulations which initially brought to a halt consignments of wine sent abroad and which continues to prohibit local sales.
According to Rico Basson, chief executive of viticultural producers organisation Vinpro, the stage five ban on local wine exports led to a loss of R2 billion.
Moreover, for every week South Africa’s consumer market is prevented from buying any wine, around R300 million is lost to the industry.
It is also expected that wine farms could lose up to 30% of gate revenue in the forthcoming months as the effects of the coronavirus on the tourism sector continue to ripple across the domestic and international travel market.
Basson told Netwerk 24 that although the industry had for some time been talking about the effects of climatological challenges, with the Western Cape only beginning to recover from a severe and sustained period of extremely low rainfall, “we are now entering a financial drought”.
The cash flow crisis currently being experienced, he said, could last for six months, and was expected to peak by July and August. Wine producers have been warned to prepare themselves for the worst.
Thus far projections indicate that up to 80 wine cellars could close down in the next two years because of the financial consequences of inflexible lockdown regulations, despite mounting medical research data increasingly showing that a ban on local wine consumption is doing very little for the government’s efforts to fight the virus.
In fact it was working in favour of the black market, Basson claimed.
He added that in 2016 illegal alcohol sales had made up 24% of the market, or around one in four of every litre of alcohol sold. Because of the lockdown that figure has now probably gone up.
This trend is already evident in the cigarette market where the sale of illegal brands is going up while legal brands sold on the black market have tripled in price.
Also, the Western Cape’s virus confirmations are spiking well higher than the rest of the country, at more than 66%.
With President Cyril Ramaphosa’s most recent announcement around foreseeable lockdown stage developments and the prospect that they will be decided on a province by province basis, it is unlikely that the Western Cape will move out of stage four.
And neither will Gauteng nor KwaZulu-Natal, two of the biggest local offset points for wine from the Western Cape.
Basson said the problems experienced with the government’s anti-alcohol and anti-tobacco regulations were massive and must be overcome as a matter of urgency.
“It’s sentiment. Someone said 80% of the ministers and parliamentarians don’t drink at all. Whether it’s true, I don’t know. What I do know is that some of the decisions taken (by government) are irrational.”