Amidst a strong ongoing harvesting season, wine businesses in Mzansi are quite optimistic about what 2022 has in store. The new year is filled with loads of opportunities for especially black winemakers, as well as other black talent in the wine industry.
Vinpro managing director Rico Basson joins us on this weekend edition of the Farmer’s Inside Track agri podcast to unpack industry challenges and how producers have managed to navigate through trying times brought on by the Covid-19 pandemic and socio-economic factors. He also shares some exciting developments that can be expected this year.
Basson says the pandemic has forced companies to do introspection. “What we have seen coming out of Covid-19 and within Covid-19 is massive introspection from lots of companies changing their strategic plan overnight, becoming far more consumer-driven and adaptable.”
He points out that the wine industry had been unable to trade for about 200 days in the past two years, leaving many industry players with a severe financial burden and a lack of cash flow.
Basson admits that there were many complicated challenges, such as rising input costs due to factors like Eskom and the national minimum wage, which had an undesirable impact on wine businesses.
But while there has been a lot of pressure on farmers, the pandemic had a silver lining in terms of forcing the sector to be more adaptive and innovative in their operations.
“It’s going to take time. I think we are in a tough domestic environment. Where we sell 50% of our wine consumer spend is under pressure and therefore we see them trading down, which is not always the best news for producers that need to shift this 50% cost somewhere,” says Basson.
Transformation in Mzansi’s wine industry
On the upside, wineries have managed to grow their exports by exporting close to 400 million litres. This is 70 million more than they did in 2020. There has been good growth in export markets, such as the United Kingdom, USA, Canada, Nigeria and China.
There has also been a spike in black brands entering the wine industry. Basson stresses that with the right focus black brands with inclusive growth in transformation and a strong client focus on new channels can grow.
“The problem is that the industry at farm level is about three or four percent transformed, if we look at 51% [black ownership] and up.
“I do think we should look at another two elements. We should look at transforming the value chain, which means we need black label and bottle companies, and then also the people element. We are not emphasising the huge change that we see on talent and new people of colour coming into the industry,” Basson points out.
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