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South Africa’s wine industry is “deeply disappointed and shocked” by a new ban on the transport of alcohol, and some producers are forced to cancel export wine shipments to be shipped to ports on Friday, according to the marketing body. from the Wines of South Africa industry.
The ban on the transport of alcohol, except for hand sanitizers and industrial use, was announced Thursday by the Minister of Cooperative Governance and Traditional Affairs, Nkosazana Dlamini-Zuma.
For the wine industry, it’s another setback as it struggles to deal with a sharp drop in revenue caused by the ban on the sale of alcohol during the national blockade.
When Cyril Ramaphosa first announced it in late March, the blockade regulations included a ban on carrying liquor “between two points,” making it impossible to transport wine to ports for export. At the time, Rico Basson, managing director of the Vinpro vine producer organization, said this regulation contradicted previous verbal commitments by national departments.
After extensive lobbying by Vinpro and a team of exporters and industry members, Transport Minister Fikile Mbalula authorized the wine industry at the end of the first week of April to transport its products to ports. and international airports to export during the closing period.
Dlamini-Zuma announced on Thursday amendments to regulations governing the blockade for the 14-day extension announced by Ramaphosa last week to curb the spread of the coronavirus. She said the only alcohol allowed to be transported is that used for commercial purposes for disinfectants and related problems. “[The] the liquor we drink is not allowed to be transported, in the same way that it cannot be sold. So that’s what we’re adding, “he said.
Dlamini-Zuma indicated that the SA economy would open “incrementally”, and South Africans could wait for new amendments to be published almost every week.
‘Sudden change’
“As an industry, we are deeply disappointed and shocked by this sudden change of direction, after an extensive lobbying with various government agencies to relax closure measures related to the export and sale of alcohol,” said Maryna Calow, communications manager for Wines. of South Africa, which markets SA’s wine exports.
She estimates that the local wine industry is losing approximately R175 million in lost exports each week the blockade continues. Grape and wine production is one of the largest export-oriented agricultural value chains, with a contribution of R49 billion to SA’s GDP.
Industry representatives have argued that the importance of being allowed to export lies not only in the foreign exchange it generates for the country, but also that local producers are trying to offset a decline in wine exports of around 30 % in 2019.
“We are following legal routes and will continue to lobby with the government despite this (latest) setback. The livelihood and long-term future of our industry is in grave danger and therefore we will explore all avenues in this regard,” Calow said.
“In addition to this, we will be losing listings in our export markets, where out-of-consumption wine sales are reported to be at their highest as consumers buy a lot of wine during their own closing periods. It could take as long as 10 years for those lost listings to be recovered again. ”
Calow noted that when Police Minister Bheki Cele initially announced the closure regulations, the collection and hold processes were also prohibited. This was later modified and the 2020 harvest could be completed. According to regulations, only processes that prevent waste of wine after harvest are allowed. This includes pressing and fermentation.
“During the week that transport of ready-to-export wine to ports and airports was allowed to take place, there were some exports. However, we are aware that some producers who were loading their trucks today (Friday) would be brought to the port and they had to drop everything, “Calow said.
When asked about a truck carrying wine that was recently hijacked, he explained that it also occurs outside of closing conditions, so it was not necessarily unique to the current situation.
Sending a message
Emile Joubert, a marketing consultant in the wine industry, cautions that the transport ban is sending a message that SA is not a reliable trading partner and that the country is not compatible with its own wine industry.
“What kind of message is South Africa sending the world about declaring wine exports illegal and leaving our international customers in the lurch?”
“SA is damaging its own reputation and that of the wine industry. This is the worst possible time, coming out of a disastrous 2019 when it comes to exports, “he said.
Tim Hutchinson, CEO of DGB, which produces and markets Bellingham, Douglas Green, Boschendal, Brampton, Tall Horse, Franschhoek Cellars and The Old Road Wine Co, says that exports are a big part of their business. The company’s sales and marketing offices worldwide distribute its wines in more than sixty countries.
“As local producers and distributors, I appreciate the reason in the local market to ban the sale of alcohol during closure, but the government has made a serious mistake in restricting exports, as we are the only wine-producing country in the world that it currently has export restrictions, “said Hutchinson.
“The South African economy desperately needs to increase export earnings, so there is no logic to this decision. If the industry had been allowed to continue bottling and shipping, as an industry we could have protected our valuable listings in very competitive markets such as numerous countries with higher household consumption, wine sales are buoyant and this would not have had a detrimental impact on the presidents’ closing policies for South Africa, which we fully support. “
DGB’s executive management team had agreed to a 25% pay cut over three months, which the President will donate to the President’s Solidarity Fund to fight Covid-19. Hutchinson has personally taken a 50% reduction in salary by donating to the fund. DGB’s international sales executives around the world have volunteered a 20% pay sacrifice during this three-month period.
According to Vinpro, almost half of South Africa’s wine production is exported and a restriction on exports would have a severe effect on wine-related companies, but most importantly it is the livelihood of about 300,000 people employed by the chain of value in the wine industry.
