Although the South African wine industry contributes R55 billion to the Gross Domestic Product and employs more than 265 000 people, it has seen a rapid decline in vineyards due to a lack of investment.
Also, as a direct result of the Covid-19 pandemic, the industry is said to have lost more than 29 000 jobs. It desperately appeals to government to cut excessive taxes to aid its recovery and help it meet its production costs.
Vinpro managing director Rico Basson says due to tough economic conditions and the impact of the pandemic, the wine industry has not seen the levels of investment it had banked on. There has also been a decline in vineyards due to investment in other, more profitable crops.
Basson tells Food For Mzansi, “We believe the wine industry can be a catalyst for growth and employment in South Africa. Addressing various issues … will assist our industry and lead to policy and regulatory certainty, which will in turn result in economic growth, fiscal recovery and job creation post the pandemic.”
Zolani Sinxo: Finance minister Enoch Godongwana’s budget speech did not bring good news for the wine industry. Let’s kick off by explaining the value of our wine industry to the economy and job creation.
Rico Basson: The wine industry, unlike the larger agricultural sector that has performed relatively well over the past year due to favourable climatic conditions and the absence of Covid-19 restrictions, is currently faced with its own unique obstacles due to an economic downturn and more notably the significant impact of alcohol restrictions since the start of the pandemic.
The wine industry is different from other alcohol industries – not only due to its tourism destinations attracting thousands of local and international visitors to the various wine regions and generating significant revenue for the economy, but also because it is a unique asset to the country. The wine industry has built and continuously maintains a strong brand reputation for South Africa on the global stage where we export to 132 countries.
The wine sector annually contributes R55 billion to GDP and provides employment to more than 265 000 people. We are happy to see there is a slow but steady recovery, but many businesses have not survived, and others will still take years to recover.
How is the industry recovering and are there any prospects of full recovery within the next year or two?
The wine industry is currently in a phase of recovering and rebuilding, but this will take time as investing in wine is a long-term investment.
2022 will also be a year of negotiation to bring about policy certainty for wine or liquor products while providing context about the total value chain. Our core focus will be disaster recovery, transformation, competitiveness and operational improvements, data and knowledge management, market growth, and communication.
What are the current challenges that are faced by the industry in the country?
The wine industry was and still is experiencing significant challenges with exports via the Cape Town port. This at a stage where the industry must utilise all market opportunities to grow and rebuild.
Vinpro is in constant discussions with Transnet and also shipping agents and shipping companies around the efficiency of the port, sharing information to facilitate planning, as well as communication.
Is there any support for small wineries and grape producers in the country and how are they coping amid these challenges?
There is and was most certainly not enough support for small businesses from government’s side.
Vinpro, however, has made (and is continuously making) several requests to government for financial relief and support, specifically with regard to employee support, marketing support, removal of the wine surplus, relief for wine farms, education and training, as well as wine tourism recovery.
We are grateful for the support the industry has received up until now from Dr Ivan Meyer and his team at the Western Cape department of agriculture. This included a R12 million wine tourism worker support stipend made available to wine tourism destinations, which has already been paid out to successful applicants. The department also made available a R13.5 million support fund to producers.
Do we see a trend of people leaving the wine industry because of the challenges or are there any opportunities for people to enter the industry?
Because the wine industry is a long-term investment industry, due to the economic situation and the influence of the pandemic on the industry, we have not seen the levels of investment we would hope to see. We have also seen a decline in vineyards due to uprooting of vines or investment in other crops. The industry lost more than 29 000 jobs during the pandemic.
The Covid-19 pandemic has, however, also created many new opportunities for the wine industry with creativity booming which include cost savings, new business models and partners, a huge focus on efficiency, partnerships, new ways of communication and marketing.
Wine exports are doing extremely well currently, and the future of the industry lies in growing value to ensure a more sustainable sector. Exports recovered to a healthier volume of 388 million litres, while the total value of our exports grew to R10.2 billion.
Sign up for Mzansi Today: Your daily take on the news and happenings from the agriculture value chain.