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One of the shock decisions by the Government during the State of Disaster during the Corona Virus Lockdown has been to make it illegal to export South African wines, and to transport wines from wine estates to the ports, just nine days after exports were allowed, and despite the export of fresh fruit and other agricultural products being allowed. The export wine ban means a loss of R200 million per week to the wine industry, says industry body VinPro.\u00a0<\/p>\n
An article by Kim Maxwell on Business Maverick today summarises this fiasco, and the reaction to it by leading wine-makers. It follows in full below:<\/p>\n
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Wine producers are confused, angry and despairing about what to try next to ensure job security of a vital yet increasingly shaky agricultural sector. Government\u2019s latest lockdown, starting on 16 April, included an about-turn on wine exports including the transporting of wine from cellar to ports, which were opened under the Disaster Management Act on 7 April.<\/i><\/span><\/p>\n The government changed tack in only nine days, with Minister for Co-operative Governance and Traditional Affairs Nkosazana Dlamini-Zuma announcing on 16 April that transportation of alcohol is prohibited, unless for the production of hand sanitisers and household cleaning products or industrial use. On the same day, Transport Minister Fikile Mbalula issued a review of lockdown measures that confirmed the transportation of alcohol was prohibited.<\/i><\/span><\/p>\n \u201cIn a nutshell, we are no longer allowing movement of wines,\u201d said Mbalula.<\/i><\/span><\/p>\n \u201cIt\u2019s borderline ridiculous. It was a bolt out of the blue,\u201d said a senior wine industry member who was involved in lobbying.<\/i><\/span><\/p>\n \u201cWe were hoping for further relaxation, such as exemptions for road exports. And also that we might potentially be allowed to start bottling for exports.\u201d<\/i><\/span><\/p>\n \u201cThe government decision to stop the export of wine during the lockdown will be devastating. A sign of a bad judgment,\u201d said the Minister of Agriculture for Western Cape Government, Dr Ivan Meyer, last week. Noting that 98% of wine cellars are in the Western Cape, Meyer immediately appealed to the minister of agriculture, land reform and rural development in a 17 April document.<\/i><\/span><\/p>\n \u201cIt is not clear what the reasoning was behind this turnaround, but from the statement by Minister Mbalula, it is gathered that a direct correlation was drawn between the export of wine on the one hand and the recent increase in burglaries and theft of alcohol from closed outlets on the other,\u201d said Meyer.<\/i><\/span><\/p>\n \u201cIt requires some explanation to clarify how export wine in transit from a warehouse to a seaport could be brought in correlation with theft from a local liquor store.\u201d<\/i><\/span><\/p>\n Indeed, the government\u2019s tenuous link between allowing wine transportation and criminality seems to crop up repeatedly as a ministerial reason for shutting down international exports of an industry which employs nearly 300,000 people.<\/i><\/span><\/p>\n \u201cThe tone we\u2019re getting from government at the moment is not positive towards business in general. They\u2019re linking alcohol to crime, and not to business. We\u2019re fighting a virus. Let\u2019s fight that,\u201d said one frustrated exporting producer operating three cellars in the Franschhoek area.<\/i><\/span><\/p>\n R200-million lost weekly<\/i><\/b><\/span><\/p>\n R200-million is the estimated weekly financial impact of lost wine exports for South African producers, according to Van Loveren CEO Phillip Retief.<\/i><\/span><\/p>\n \u201cBy Thursday 23 April it will be a month since lockdown began. Over a four-week period, that would be R800-million of lost foreign currency in trade inflows.\u201d<\/i><\/span><\/p>\n Retief is on the Vinpro and Wines of South Africa (Wosa) industry task team. In just over a week, since 7 April (when wine exports opened), he says 1,400 containers of bulk or bottled wine were booked for export through Transnet via local ports. The period included the Easter weekend public holidays.<\/i><\/span><\/p>\n Vinpro MD Rico Basson said at the weekend that urgent meetings were in place to \u201ctry to get answers, new information and find a way forward for the industry\u201d. A 16 April joint statement from Vinpro and Wosa said the industry was \u201cdeeply disappointed and shocked at this sudden change of direction\u201d as \u201cthe livelihood and long-term future of our industry is in grave danger\u201d.<\/i><\/span><\/p>\n \u201cWe are continuing discussions with government in a much more urgent and forceful level,\u201d said Wosa communications spokesperson Maryna Calow.<\/i><\/span><\/p>\n \u201cWe\u2019re also looking into potential recourses, and what grounds we may have legally in that regard.\u201d<\/i><\/span><\/p>\n Under current lockdown conditions, the only processes that can take place are those tying in with 2020 harvest processes. Producers may be in cellars but cannot manufacture or transport wine.<\/i><\/span><\/p>\n South Africa\u2019s wine exports are the second largest agricultural crop after citrus, according to Bureau for Food and Agricultural Policy figures. Wine exports totalled 320 million litres during 2019, during a severe drought. The 2018 exports were 420 million litres.<\/i><\/span><\/p>\n Only wine country not exporting<\/i><\/b><\/span><\/p>\n \u201cSouth Africa is unique and alone in that it\u2019s the only major wine-producing country that is not able to export at all during coronavirus. Our key customers have shelves to fill. They\u2019re selling wine and will have to make decisions soon about what they stock the shelves with. To reclaim that market share will be a vital challenge,\u201d said Accolade Wines\u2019 GM of South African operations, James Reid.<\/i><\/span><\/p>\n Nearly 50% of South Africa\u2019s wine production is exported. Accolade\u00a0Wines\u00a0is the number one\u00a0wine\u00a0company by value in the United Kingdom, South Africa\u2019s leading export market. Accolade\u2019s Kumala brand is South Africa\u2019s leading UK brand.<\/i><\/span><\/p>\n \u201cWe have orders due to go out, and more to go in the coming couple of weeks,\u201d added Reid.<\/i><\/span><\/p>\n On 17 April, the Presidency also declined the request of the Gauteng Liquor Forum members to sell alcohol locally during the National State of Disaster, stating that \u201cthe restriction on the sale of liquor will remain\u201d.<\/i><\/span><\/p>\n In that statement, the Presidency said it \u201cconsidered representations from other stakeholders who have pointed to the causal relationship between alcohol intoxication and abuse, and risky behaviour. There are proven links between the sale and consumption of alcohol and violent crime, motor vehicle accidents and other medical emergencies\u201d.<\/i><\/span><\/p>\n Socio-economic provision<\/i><\/b><\/span><\/p>\n Yet, what bearing does the potential of alcohol to cause destructive local behaviour have on wine exports?<\/i><\/span><\/p>\n \u201cPeople are confusing the issue. Exports have nothing to do with the local consumption market,\u201d said Bernard Fontannaz, CEO of Origin Wines UK. Origin Wines is among the top three South African exporters in terms of volume, with 95% of its production exported. Outside of lockdown restrictions, Origin exports 1.1 million to 1.2 million cases a month, or about 400 containers.<\/i><\/span><\/p>\n \u201cWe all understand the dilemma. However, we have a responsibility to mitigate the socio-economic cost. That\u2019s what it comes down to. People who are living month to month cannot survive thereafter.\u201d<\/i><\/span><\/p>\n Origin directly employs 340 people in the Boland.<\/i><\/span><\/p>\n \u201cIf every employee has a family, conservatively feeding, say four people, that means we\u2019re supporting 1,360 people,\u201d says Fontannaz.<\/i><\/span><\/p>\n \u201cSo it\u2019s not about excise duties and forex. It is about guaranteeing a basic income to your workforce. It is about people who are hungry because they cannot feed themselves.\u201d<\/i><\/span><\/p>\n Down the line, successful exporters stand to lose space on overseas shelves. Being unable to provide clear dates for resuming production, means companies and the country loses business credibility.<\/i><\/span><\/p>\n David Finlayson of Edgebaston wines in Stellenbosch was also affected by halted export orders. He said an investment in winemaking is costly with slow returns.<\/i><\/span><\/p>\n \u201cCash flow is detrimentally affected when there is basically two months\u2019 zero income. This has to affect operations. We have continued paying our staff salaries and wages, but can\u2019t keep doing so for months on end.\u201d<\/i><\/span><\/p>\n \u201cLet\u2019s just say I\u2019ve lost 10% of my annual turnover. In cancelled orders for Mauritius and Belgium. And in lost sales in Germany and USA, where I can\u2019t send samples for tenders due to couriers not being allowed to transport alcohol.<\/i><\/span><\/p>\n \u201cOur biggest issue with exports, which are 50% of our business, is that we\u2019re going to start struggling to pay bills and staff if this doesn\u2019t get lifted by early May. Everyone I speak to in the wine industry is in the same boat.\u201d<\/i><\/span><\/p>\n Mount Abora Vineyards co-owner Pieter de Waal roped in family to load 140 cases of wine on 16 April, destined for Belgium.<\/i><\/span><\/p>\n \u201cAll paperwork was in order, with a printout of the Government Gazette, allowing the transport of wine for export,\u201d he said.<\/i><\/span><\/p>\n \u201cThen our esteemed minister of transport decided to ban the exporting of wine with immediate effect. This means we have to go and unload the 140 cases.\u201d<\/i><\/span><\/p>\n Small measures<\/i><\/b><\/span><\/p>\n The smaller the producer, the greater the knock-on effect. Boutique Franschhoek winery Haut Espoir farms bio-dynamically, producing only 30 tons. Owner Rob Armstrong said he was stumped by wine exports being cancelled on 16 April.<\/i><\/span><\/p>\n \u201cThe only cash flow Haut Espoir has for now was one export pallet planned to leave the farm this morning for a European client. Just had to cancel the transport and very sad at this sudden change of tack. Worked tirelessly to arrange all the documents and admin for this export. Gone.\u201d The pallet carried 672 bottles, worth an estimated R140,000. The industry is calling loudly for wine exports to be reinstated, to keep jobs alive.<\/i><\/span><\/p>\n As Meyer pointed out in his communication, if security of movement between cellar, warehouse and port is of concern, measures can offset the risk. These include monitoring of trucks via GPS, private security firms as escorts or trucks travelling in convoy. Absorbing the security costs of transported alcohol convoys would be a consideration entertained by exporting wineries.<\/i><\/span><\/p>\n \u201cIt\u2019s like a yo-yo policy,\u201d said Fontannaz of the current situation. \u201cPeople like clarity, whatever the rules are, let\u2019s be logical and consistent. Stopping it for local alcohol consumption and looting just does not stand scrutiny.\u201d BM<\/b><\/i><\/span><\/p>\n <\/p>\n Chris von Ulmenstein, WhaleTales Blog: www.chrisvonulmenstein.com\/blog Tel +27 082 55 11 323 Twitter:@Ulmenstein Facebook: Chris von Ulmenstein Instagram: @Chrissy_Ulmenstein<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":" One of the shock decisions by the Government during the State of Disaster during the Corona Virus Lockdown has been to make it illegal to export South African wines, and to transport wines from wine estates to the ports, just nine days after exports were allowed, and despite the export of fresh fruit and […]<\/p>\n","protected":false},"author":8,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_jetpack_memberships_contains_paid_content":false},"categories":[25543,3,124,39707,39790,528,32565,19],"tags":[24376,25435,39977,39974,39968,32378,39970,9930,15306,5282,9045,12189,39976,3956,21715,4678,39975,4330,3234,39973,39971,21574,15879,39972,21524,11489,18313,1469,811,39969,1120,597,13936,9343,3141,1528,3336,156,155],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\u00a0<\/i><\/span><\/div>\n\u00a0<\/i><\/span><\/div>\n