Many rejoiced on Saturday, August 18 when President Cyril Ramaphosa announced that alcohol sales would be reallowed as the country shifted to alert Level 2 at midnight on August 17. While it is good news that alcohol sales have reopened, many sellers may still be positioned to shut their doors.
According to Vinpro, more than 80 wineries and 350 wine grape producers won’t survive the next 18 months and will be forced to close. The industry is believed to have lost over R7-billion since the alcohol ban was first instated in March.
“Although we are grateful to start trading and delivering online sales again, we are dismayed at the extent of the damage caused to our industry during the temporary ban on exports and extended restrictions on local sales,” says Rico Basson, MD of the wine industry organisation Vinpro.
They also predict that up to 21 000 people in the industry could lose their jobs this year.
Speaking during an interview with Retailing Africa, Hein Koegelenberg, CEO of La Motte and Leopard’s Leap and chairman of the board of the Franschhoek Wine Valley Association explained that it will take the wine industry about 18 months to recover from the damaging effects of the alcohol ban on their business.
While he is grateful for the lifting of the ban, Koegelenberg fears it may be too late for many in the industry.
Theo de Jager, chair of the Southern African Agri Initiative (Saai) board of directors, agrees. According to Moneyweb, de Jager describes a “bloodbath of jobs in the wine industry”. Wine production has been severely hampered by lockdown regulations.
“Overflowing cellars have no storage capacity in tanks and barrels, and have already notified producers that they are unable to allocate 2021 quotas,” he told Moneyweb.
Koegelenberg says that for the industry to begin economic recovery, all sectors will need to work together.
“The survival of each establishment is to the benefit of all. Bigger brands have to support smaller ones. Franschhoek vignerons are in the process of finding effective ways of support for smaller wineries. While keeping financial pressure and economic uncertainty in mind, it is very important that we don’t lose all the hard work that has gone into brand building over the last 15 – 20 years,” he says.
Koegelenberg says retailers can support local establishments by ensuring shelf space for suppliers, maintaining their listings, working with them on advertising and not offering irresponsible discounts or margins.