Coronavirus and SA wine: Tertius Boshoff of Stellenrust
By Christian Eedes, 19 May 2020
The current conversation around Coronavirus and its effect on the South African wine industry is perhaps inevitably very emotionally charged.
We put the same set of questions to a variety of industry stakeholders with a view to obtaining a better understanding of what’s happening on the ground and also plotting a way forward. Here is how Tertius Boshoff of Stellenrust replied:
How badly has Coronavirus crisis impacted your business?
In all honesty, it has basically brought our business to a standstill. We hadn’t even finished harvesting during the first week of lockdown and were forced to wait for permission to continue. Coming from a medical background, I fully understand the severity of this virus and its potentially devastating effect on South Africa; especially in view of our public health sector and the socio-economic reality of unemployment and poverty.
Still, some of the regulations were really not well thought through – and their implementation had little to do with curbing the spread. One example, blocking exports for about two weeks cost us an estimated 12 000 bottles worth of Chenin Blanc sales off Finnish monopoly Alko shelves. In addition to this, in any monopoly and EU or UK retail setting, the continued presence of your product on shelf is determined by the performance based on annual sales. See where I’m going with this? That 12 000 bottle sales dip is going to have an effect – long term. It is a snowball effect cutting much deeper into the South African wine industry than is immediately transparent. The after-effects are yet to be seen.
How many wineries do you foresee closing as a result of the pandemic? What future for growers?
It appears that everyone in the industry is trying to get bulk wine into the market as quickly as possible. I received a generic mail from a bulk wine dealer this week with a list of wines available at quite steep prices, but the mail stated winemakers should wait it out as the prices won’t stay that high. And this is exactly where Covid-19 is creating our secondary wine business infection. I suspect to survive, there will be undercutting and discounting – both at bulk and bottled level – just to get wine moving for SOME sort of income. It’s only natural for everyone to want to survive – from grower to bottler – but the South African wine industry (especially WOSA and Vinpro) have done a great job over the past years to improve the price points and status of South African wine. There is a reason why only about 13% of wine producers in South Africa are profitable… and it’s the result of this rotten legacy of discounting and undercutting.
What plans do you have in place to get going again once restrictions are eased? How will doing business be different?
Pretty much like everyone else, we are driving online sales at present and using more outlets than just our own online shop to reach customers. In fact, using as many routes to market as possible! Market research during recessions has proven that most people generally become less brand orientated and drink what they can afford. We’re about to hit the world’s largest recession since 2008 and probably rivalling that of the 1930s and luckily our range caters for drinking from entry level to expensive reserve wines in a portfolio of more than 30 wines. In light of that, we’re reducing the range also to focus solely on the wines that run on larger volumes but still pay the bills. You can only bet on your strongest horse to win the derby, right? Our core focus now is reaching customers with direct marketing – B2C is the new B2B and we have a mission to personify the brand through retail outlets and through direct customers sales.
What will the South African wine landscape look like after the pandemic? Will the industry recover quickly or will it be changed forever?
Confucius apparently said: ‘only the wisest and stupidest of men never change’. There’s little doubt that the wine industry WILL change – but will it be for the better or not? That question remains to be answered. With an already large amount of grape growers and wine brands struggling, it is inevitable that there will be collateral damage from this pandemic. The landscape will change. Retail and online sales will be king for the near future/short term and cash will be his queen. New developments and plantings will have to be funded from capital resources and not through debt. However heartless this may sound, it will be a situation of survival of the fittest and possibly leanest. And may God bless us all as He has blessed Stellenrust.
Read other interviews:
Chris Alheit of Alheit Vineyards
Gerard Holden of Holden Manz
Johan Kruger of Kruger Family Wines
Bruwer Raats of Raats Family Wines
Mike Ratcliffe of Vilafonté
Johan Reyneke of Reyneke Wines
David Sadie of David & Nadia
Eben Sadie of Sadie Family Wines
Michael White of Highlands Road