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africa|business|environment|export|health|resources|road|safety|services|tourism|water|products

Wine industry recovery to be slow, says Vinpro

21st August 2020

By: Tasneem Bulbulia

Senior Contributing Editor Online

     

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After an extremely challenging few months since the start of the national Covid-19 lockdown in March, nonprofit organisation Vinpro entered this past week with a renewed hope that the South African wine industry would start rebuilding, the organisation said.

Along with the phasing in of lockdown Level 2, wine trade and distribution have reopened (with certain restrictions), wine tourism destinations and restaurants can expand their services and interprovincial and air travel will help stimulate tourism further, it noted.

“We are, however, still dismayed at the damage done to our industry over the past few months. A long road to recovery lies ahead, as confirmed by the Bureau for Food and Agricultural Policy (BFAP) wine industry forecast . . . Vinpro is working closely with industry partners on an urgent disaster recovery plan to stabilise the sector, but ask for support from individuals and businesses in the value-chain to bring about a revival,” it said.

It noted that, at the same time, the South African wine industry was receiving support from international and local consumers through various social media campaigns and other digital platforms.

“Now that trade has been opened up, we have a joint responsibility to ensure that it remains open. We therefore call on each person and business working in the industry to strictly adhere to the necessary health and safety protocols, while focusing on changing behaviour with regard to responsible production, promotion, trade and consumption,” Vinpro emphasised.

The BFAP indicates that this year is set to be one of the most challenging years yet for the country’s wine industry.

Having gone through a period of consolidation and structural adjustment post-2015, amid prolonged climatic challenges, production bounced back strongly in 2020, but challenges abound on the demand side, the BFAP notes.

Globally, markets have slowed in the wake of the Covid-19 containment measures and weak economic prospects.

In South Africa, this is the case as well, but the situation was further exacerbated by sales restrictions through various stages of the lockdown period, says the BFAP.

While global markets remain weak, rapid depreciation of the exchange rate provided some consolation, lending support to rand-based prices.

In 2019, export volumes declined sharply, but the industry was successful in attaining higher prices for export products, despite weak international markets.

The expected year-on-year increase in export volumes this year, despite the challenges in global markets, also provides a small positive, says the BFAP, albeit from a sharply reduced base in 2019.

Going forward, it expects the industry to be faced with new norms, in terms of the economic environment in which it operates, as well as water availability and increasing competition for resources from the fruit sector, which has been more profitable than wine in recent years. 

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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