South Africa's wine export ban could lead to "astronomical" damage to its future

The five-week lockdown ban on wine exports could cost the South African wine industry one billion Rand (£43 million), while the damage to reputation and consistent supply, as well as future market opportunities could be “astronomical”, according to Wines of South Africa (WOSA).

In a government briefing on April 16, exports were brought to a halt for the South African wine industry, which on average exports wine to the value of R175 million (£7.5 million) each week. It is also the biggest supplier of Fairtrade-certified wine in the world. 

In a statement, the Stellenbosch arm of WOSA said: “Whilst we have the highest regard for the magnitude of the Covid-19 crisis we are dealing with and fully subscribe to the measures needed to ensure containment, we also need to position that the ban on the export of bulk and packaged wine, raises a significant risk towards the economic sustainability of this industry and, more importantly, the social-economic stability of the rural communities where more than 40,000 workers and their dependants are employed on grape farms and wineries.

“Through extensive lobbying the wine industry has continuously engaged with various government entities to urgently request that wine for export be classified as an essential food product, which will allow producers to ship finished goods (packaged and bulk wine) during the lockdown period.”

The industry body said the effect of the ban – compounded with the fact that all local sales and distribution of wine is also strictly prohibited – could see an industry which has been struggling financially for years, “finally brought to its knees”.

It said: “As an industry, our contribution to the GDP for the SA economy exceeds R49 billion annually and creates roughly 290,000 jobs directly and indirectly. As South Africa’s second biggest agricultural export product, wine earns more than R9 billion worth of foreign revenue each year through exports of roughly 50% of total production, with the other 50% sold locally.”

South Africa is the only wine producing country to experience such a stringent ban on exports in this time.

The statement said: "It is estimated that the five-week ban during the lockdown period could conservatively have a direct export revenue loss of more than R1 billion (FOB value), however the damage to reputation and consistent supply as well as future market opportunities could in fact be astronomical in the longer term with the loss of listings for many South African wines within the retail environment.

“Despite the industry clearly appreciating and embracing government regulations that have been implemented to ‘flatten the curve’ of the Covid-19 virus, the South African wine industry’s pleas are seemingly falling on deaf ears with the government.

“The ban placed on wine exports is counter-productive, as it raises a significant risk to the economic, and more importantly, socio-economic stability of South Africa, along with risking the livelihoods of rural communities who will be directly affected due to the financial implications from an industry that could quite likely see devastation.”

An Export Task team has been assembled, which is made up of industry including WOSA, Vinpro and SALBA, as well as some local exporters and international importers. This combined group have been continuously lobbying with various government entities, such as the Department of Agriculture, the Deptartment of Transport and the Department of Trade and Industyry, to engage and consider the industry's position. They have also engaged with local government (Western Cape) and Wesgro. 

The President will address the nation tomorrow (April 23) in which he is believed to be set to outline economic measures and may announce some relaxation of the current measures, but there is currently no indication that this will impact rules about exports. 

 

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