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South Africa's wine industry “must adapt to survive”

Published:  21 January, 2022

Wine oversight body Vinpro has urged South Africa’s winegrowers to use the pandemic crisis as an opportunity “to revive, recover and rebuild,” adapting current business models to better cope with a rapidly changing world.

This rallying cry for the nation’s struggling producers was delivered at the 16th annual Nedbank Vinpro Information Day, a conference attended by close to 450 virtual and in-person delegates at an estate in Franschhoek, on 20 January.

“The wine industry still faces harsh realities while recovering from the after-effects of Covid-19,” said Vinpro's MD Rico Basson.

“Glass shortages, export and import challenges at Cape Town harbour, the contrast between a 15% spike in farm cost inflation and a 3 to 5% wine price increase, as well as a growing illicit market are some of the issues that have a significant effect on the entire wine value-chain.”

Nedbank Group chief economist Nicky Weimar also observed that “consumers have become thriftier than before the pandemic, maintaining savings while keeping borrowing in check. Economic growth is expected to moderate to 1.7% and 1.8% this year and next year respectively, trending to a softer 1% in 2024. “We’re still stuck in the downturn we were in before Covid-19 hit.”

However, Vinpro reported that the industry had managed to reduce the uncontracted wine stock from 200 million litres at the end of 2020 to 60 million litres at end 2021 – in part by allocating wine grapes to grape juice concentrate. This, which along with a smaller wine grape crop (as estimated by SAWIS) may relieve downward price pressure in 2022. Wine export volumes and value have also shown good growth in 2021, particularly in traditional markets such as the UK, while diversifying into the US, China and Africa.

Offering advice on how attending wineries could build a “more sustainable future”, Vinpro's wine tourism manager Marisah Nieuwoudt said that “wine tourism is one of the key drivers of the industry’s strategic growth plan, which aims to attract international visitors and expand wine’s local fan base throughout all wine regions to grow revenue, create employment and upskill staff.”

According to Cape town-based wine educator Erica Taylor, the region's economically vital hospitality sector is showing signs of recovery.

“Restaurants and bars remained open over the Christmas holidays and domestic tourists were thriving. New restaurants are opening too – the La Colombe group opened two new restaurants at the V&A waterfront in Cape Town in December. It’s like a new beginning,” said Taylor.

Meanwhile, Vinpro consultation service manager Conrad Schutte had advice on dealing with the ongoing challenges posed by climate change.

“Plant the right cultivars for your wine goal on the right sites, while considering drought-tolerant rootstocks, cultivars and clones. Use water more efficiently by implementing monitoring systems that continuously measure if, when and how much you should irrigate,” he said.

“The wine industry has what it takes to drive sustainability, but need a unified framework to drive this forward,” added Bridgitte Backman, vice president of communications and public policy and government affairs at PepsiCo.

She suggested that the industry and businesses start by selecting a set of the United Nations Sustainability Goals (SDGs) that are attainable within their context and build success stories around them. “Apart from people, planet and profit, we should consider the purpose – why are we doing what we’re doing – and make these elements part of our DNA,” Bridgitte said.

Vinpro chairman Anton Smuts closed the conference with a positive appraisal of the future.

“I believe that the South African wine industry will rise up again to reach its full potential and rebuild towards being stronger, more sustainable, robust and competitive.

“However, we need to be introspective in terms of our choice of business models and turn challenges into opportunities. We need to be determined in our outlook, refocus our thoughts and be more innovative to adapt to the changes taking place around us every day. Together we will revive, recover and rebuild towards a better 2022 and beyond.”