Tim James: Tough times ahead for SA wine

As we know in general terms, the lockdown prescribed to limit the social effects of the Covid-19 pandemic hit the overall South African wine industry hard in 2020. When the most recent ban on local  alcohol sales was announced at the end of the year, the large industry body VinPro (never reluctant to plead the suffering of its members) summarised the “dire” situation as follows: “The previous two bans had a devastating impact on the wine industry with a loss of more than R7.5 billion in sales revenue, significant job losses and a number of wineries and tourism facilities being forced to shut their doors. As a result the industry now has more than 250 million litres of uncontracted wine.”

Looking sideways at this picture of gloom, I suspect one can see elements of it as revealing yet again the deeply unhealthy situation of an industry which has been largely devoted to quantity rather than quality, since the stewardship of the KWV dictated this strategy through much of the 20^th century. It’s a strategy that is proving very difficult to escape – and, frankly, I’m not sure how hard the industry leaders are even really trying to do so. The current crisis is one greatly exacerbated by lockdown, but not entirely caused by it.

Anecdotal evidence (as well as some statistics, which I’ll come to) suggests that it is the very large producers that suffered worst from lockdown – the big merchants like Distell and KWV and the producer cellars (the “co-ops”). Unsurprisingly so, of course, as they constitute by far the greatest proportion of the industry. Private producers have lost, especially in restaurant and cellar-door sales, but their overheads tend to be smaller, and many have made up temporary losses of sales by increased online business (quite apart from those that made a killing by illegal sales during lockdown).

On illustrative story doing the rounds (and which I tried to get official confirmation of) has it that that a few months back a ship left Cape Town with many, many million litres of white wine being sold at rock bottom prices – but at least helping to clear space for the looming harvest 2021. And it’s worth being reminded just how low international prices are for Cape wine usually, though perhaps four times what it was for this particular shipment of desperation. Recently, the South African bulk wine average in the UK increased slightly but was still a mere 65p (about R13) per litre, compared with (just looking at the New World) Australia at 81p, Chile at 89p, Argentina at £1.09, USA £1.33, New Zealand at £2.09. (Those people who think that the problem with South Africa’s international wine image is that its top wines are not getting high enough prices should consider that comparision.)

Talking of exports: remember all the fuss when exports were made impossible for a good while, and how terrible this would be for the industry? A European winewriter friend told me recently that “WOSA succeeded in convincing everyone a few months ago that the end was almost nigh and that we all needed to write about SA urgently to stop the entire trade collapsing”. Interestingly, exports for the 12 months to end November 2020 were almost identical to what they were for the previous year. They had, of course, fallen during the early months of lockdown, but have rebounded fairly spectacularly since then, and for the past six months have been well more than 10% up on the previous corresponding period.

It is local sales that have been the disaster. Again, they were up for the three months to November over the corresponding period in the previous year – but the lockdown months had hit hard. Over the whole of 2020 (to end November), sales were less than 80% of what they were for the previous year. And the current ban on sales is, of course, going to knock the figures further back.

Meanwhile, the grapes are swelling on the vines, and the secateurs are being sharpened – though it looks like harvest 2021 will be a week or more later than usual. But it looks like many vineyards will have been left unfarmed or unrooted over the past year, with the likelihood of income from grape sales being lower than cost of production. Many contracts from the usual big buyers have been cancelled, reportedly, even at the usual mean prices.

The grape-farming industry is, as one farmer told me gloomily, “in terrible shape”. Anecdotal evidence from informed sources suggests that the reduction in the size of the South African vineyard, declining annually for well over a decade now, will be even steeper in 2020. We must await the figures to be sure. Whether this is necessarily a problem for the country or the world’s winelovers is another matter; it’s arguable both ways – we must hope that good vineyards are not disappearing.

Perhaps the (somewhat despairingly flippant) conclusion for the concerned local winelover is this: if you want to help “the industry”, you must drink sweet rosé and off-dry white and red by the boxful when it becomes available again, whatever the cost to your liver and the wellbeing of your loved ones. If you want to keep the producers of proper wine going – well, carry on with what you’re doing now.