Based on projections, 60 to 80 wineries face possible closure and an estimated 22,000 jobs could be lost – Vinpro
CAPE TOWN – The wine industry could turn sour, with 13,000 hectares of vineyards lost during the lockdown – and even at Level 1 it is running at a R7.5 billion loss.
Southern African Agri Initiative chief executive Francois Rossouw said: “We have predicted this, and the knock-on effect of the national lockdown will be felt, and the losses will be far bigger.
“The big problem wine manufacturers are facing is that come next year, they will say they cannot produce any more wine because they don’t know where to store it.
“From what we know, some winemakers are sitting with 300 million litres of wine and can’t sell it.”
Rossouw said regulations for alcohol sales could have a detrimental impact on the wine industry.
“The regulations do not make any sense because there is no scientific evidence (to support them). The Western Cape is heavily reliant on the wine industry and (its difficulties) will have a significant impact on the local economy and on many jobs. The government must urgently intervene in the matter,” he said.
The wine industry is struggling to make up for its losses after nearly seven months of a nationwide lockdown. More than a dozen wine farms have taken the government to court over the lockdown regulations.
Under Level 1 the sale of alcohol is allowed during the week at specific times. However, the sale of alcohol is prohibited over weekends, which makes it hard for wine cellars to sell alcohol to visitors.
Vinpro spokesperson Wanda Augustyn said: “The wine industry will never recover from the losses that occurred due to the ban on exports, as well as the ban on the sale of wine in the local market. The three-week ban on exports had a huge direct export revenue loss, but the damage to reputation of consistent supply and future market were also enormous. The industry lost R400 million every week when the local sale of wine was prohibited.”
According to Vinpro, based on projections 60 to 80 wineries faced possible closure and an estimated 22,000 jobs could be lost. “The industry faces significant cash flow challenges across the spectrum and the value chain we have already seen some closures,” Augustyn said.
“The next 12 to 18 months will remain tough. A significant number of our wineries are extremely small in terms of turnover and rely on direct sales (vs retail). Seventy-five percent of the 533 wineries have a turnover of less than R10 million per year. This is why tourism (especially foreign) is so important.”