South African wine grape producers experienced a traumatic COVID-19 rollercoaster ride over the last two months.
An initial ban on wine exports was announced on 25 March and came into effect at midnight on 26 March. This was then lifted on 7 April, only to be reinstated again on 16 April.
Industry organisations frantically engaged and deliberated with government following the announcement on that wine may not be transported. The South African government then decided on 29 April to lift the transport restrictions once more as the country moved from level 5 to level 4 lockdown. South African wine exports resumed from Friday, 1 May. The damage, however, was done. The changing situation, in addition to local sales being banned, has resulted in disruption and potential revenue loss of around R1 billion.
When you look at SAWIS’ most recent wine export figures for April 2020, it paints a grim picture of South Africa’s (and the Government’s) stop-start-stop ban on exports due to the COVID-19 pandemic. A total of 7.7 million litres of wine (bulk and packaged) were sent from our shores during the month of April, 21.4 million litres less compared to April last year.
Chenin Blanc, South Africa’s biggest single grape variety to be exported managed to ship a total of 4.6 million litres in April 2019. This year only 1.28 million litres (packaged and bulk) were exported during this time.
View the performance of our April 2020 exports here.
Maryna Calow, communications manager at Wines of South Africa (WoSA), says despite export losses of R175 million per week, the South African wine industry may have lost valuable shelf space and listings at major retailers in the markets abroad due to the export ban. “Other wine producing countries were able to export, which led to us losing valuable ground. The ultimate impact still remains to be seen.”
South African wine producers had a nine-day window period in April that they were allowed to export their wine. Four of these days fell over the weekend, so in essence, only five working days were allowed in which producers had to ship their merchandise to the international market.
Maryna says that logistically, there are a lot of moving cogs and processes behind the scenes when exporting wine. “This ranges from logistics, transport, certifications and many more. When the industry was informed that they might resume their exports, all those processes had to be put in place, and then had to be reset when the ban was reinstated. Nine days later, everything had to be stopped again. Many producers had their loads ready for export on Friday (17 April), but had to cancel everything at the last minute when the decision to ban exports was reinstated.”
Charles Whitehead, manager of information services at SAWIS says the South African wine market understood, to an extent, the interim export ban. However, he adds that the industry’s frustration was with Government’s decision to allow, ban, and then allow South African wine exports. “The international market still perceives our wine as good quality. There’s been a lot of positive wine articles circulating the international press cycle over the past couple of months.”
On a positive note
South African producers made the most of this limited window of export opportunity, and the 4.5 million litres could easily have been zero litres exported.
“When compared to April 2019’s export figures,” Maryna says, “the 2020 exports actually looks pretty decent. If we had been able to continue exporting during that time, I believe our wine exports would have looked a lot healthier and the forecast for May 2020’s wine exports are looking a whole lot better.”
Dirk Harris, director at the Michelangelo International Wine & Spirits Awards, says hope is growing for the recovery of the R47 billion we lost for the wine industry, especially with wine producers now being able to operate and export once more under level four of the lockdown.
“Not only will this help save jobs, but it will also enable the industry to contribute to the country’s ailing economy. I am confident South Africa’s value of exports will increase after 2020 when the COVID-19 dust settles. “The main reason is the decrease in the value of the Rand. Exporters have launched several deals over the past two weeks, capitalising on the weak exchange rate. It’s certainly a positive for wine exports.”
In 2018/19, the South African wine industry exported only 51% of its stock. Dirk is optimistic that this figure will increase, especially with demand and consumption remaining healthy in markets like the UK and the US.
The 2017/18 drought has shown that South African wines tend to retain their value in times of trouble. For example, although the drought period saw wine production slowing down from 968 million litres in 2015/16 to 824 million litres by 2018/19, the period simultaneously saw an increase in the value of wine sales, which grew by 27.7% between 2015/16 and 2018/19 from R3.9 billion to R5.4 billion.