The state needs to see the wine industry as a national treasure
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Covid-19 has left the SA wine industry in a state of chaos. Radical action is necessary to prevent long-term retardation. The multi-pronged agenda of the government’s alcohol ban needs a counterbalance to address the severe demand shortfall and its far-reaching effects.
The following is a way forward, using the international sales and strategic government support to rebalance the markets.
Successful implementation in the short and medium term will establish a sustainable path for the longer term. Success will bring comprehensive benefits across the entire tourism ecosystem. More so than ever before, this is the time to look for the win-win.
Let’s look at what Covid-19 had done and is doing to the SA wine industry, an industry that directly employs about 300,000 people. Over the past nearly five months, local sales have been almost totally banned. Export sales were banned for a period of about five weeks. The ports are operating very slowly, causing significant delays. International buyers are, in many cases, prolonging order lead times.
Added to this, payment delays are resulting in huge cash-flow issues for wineries. Tasting rooms have been closed since late March. Tasting room sales in the forthcoming “tourist season” will be dramatically hit due to the absence of foreign tourists. Job losses are now in the tens of thousands, and permanent, long-term damage is virtually assured.
One should also consider that restaurants (which are suffering enormously) have very low investment capex in comparison to wineries, which have very high capex (the winery, the vineyards, the barrels and the inventory). Profitability can take decades. It is worth bearing in mind that in 2019 — probably the best year ever for the industry — only 30% of wineries turned a profit.
From our vineyards to end-consumption, locally and internationally, it is the ultimate achievement of the full value add — a product that is now world-class. Locally, further value is added by the proliferation of world-class restaurants, with SA wines being part of the highlight. It is hard to find any other SA industry that captures so much of the value chain.
In a crisis, the impossible becomes possible. This is an appeal for government sponsorship and support for a significant international marketing campaign. Up to now, Wines of SA has been industry-funded — no government funding at all. SA competes with marketing bodies such as Wine Australia and Wine New Zealand, which are generously funded ...
The following is a way forward, using the international sales and strategic government support to rebalance the markets.
Successful implementation in the short and medium term will establish a sustainable path for the longer term. Success will bring comprehensive benefits across the entire tourism ecosystem. More so than ever before, this is the time to look for the win-win.
Let’s look at what Covid-19 had done and is doing to the SA wine industry, an industry that directly employs about 300,000 people. Over the past nearly five months, local sales have been almost totally banned. Export sales were banned for a period of about five weeks. The ports are operating very slowly, causing significant delays. International buyers are, in many cases, prolonging order lead times.
Added to this, payment delays are resulting in huge cash-flow issues for wineries. Tasting rooms have been closed since late March. Tasting room sales in the forthcoming “tourist season” will be dramatically hit due to the absence of foreign tourists. Job losses are now in the tens of thousands, and permanent, long-term damage is virtually assured.
One should also consider that restaurants (which are suffering enormously) have very low investment capex in comparison to wineries, which have very high capex (the winery, the vineyards, the barrels and the inventory). Profitability can take decades. It is worth bearing in mind that in 2019 — probably the best year ever for the industry — only 30% of wineries turned a profit.
From our vineyards to end-consumption, locally and internationally, it is the ultimate achievement of the full value add — a product that is now world-class. Locally, further value is added by the proliferation of world-class restaurants, with SA wines being part of the highlight. It is hard to find any other SA industry that captures so much of the value chain.
In a crisis, the impossible becomes possible. This is an appeal for government sponsorship and support for a significant international marketing campaign. Up to now, Wines of SA has been industry-funded — no government funding at all. SA competes with marketing bodies such as Wine Australia and Wine New Zealand, which are generously funded ...
