South African wine: does the government have a hidden agenda?

Ahead of an announcement from the president, South African wine producers fear the government is using coronavirus to wage retribution on an industry that, according to their trade body, it ‘has not supported for many years’

Words by Adam Lechmere

Cape Town
Cape Town harbour with Table Mountain in the background

[update 21/05/20]  The transport and export of wine, manufacturing and related services has been permitted since 1 May but domestic sale of alcohol is banned under the Level 4 lockdown regulations still in force. President Cyril Ramaphosa announced on 13 May that there may be easing of the restrictions on 1 June but no detail was given. In early May a panel of industry experts including Rico Basson, executive director of VinPro, which represents 2,500 of the country’s grape growers and wine producers, suggested the industry needs to expect further lockdowns and upheavals in the coming weeks and months. “It is likely the government could move between levels 3, 4, 5 [with varying severity of restrictions] if the virus situation changes. So uncertainty is going to be a way of life for some time,” The Buyer reported.

The South African wine industry is “in freefall”, losing millions a week since the lockdown began, and commentators at all levels have excoriated the government for its handling of the crisis.

According to some sources the industry has lost ZAR650m (£27m) since late March. Wines of South Africa puts the figure in lost exports at R175m (£7.49m) a week.

While harvest was allowed to go ahead – after the government had initially banned all producers from working in the winery or picking grapes – alcohol sales have been banned, including all transportation and export of alcohol.

But it is the mixed message from the government that is frustrating and infuriating the industry: the ban was lifted on 7 April, only to be reinstated ten days later. Wineries that had welcomed the initial easing of restrictions by preparing pallets for export found that they were left hanging. “We had three pallets destined for Switzerland on Friday,” Carolyn Martin of Creation Wines in Walker Bay told Club Oenologique. “We were just back on track and then we had to shut down again.”

Creation Wines vineyard
Creation Wines

The government said increased criminality necessitated the reinstatement of the ban – on 16 April, Minister of Transport Fikile Mbalula said, “criminality…has reared its ugly head in the form of burglaries and theft of alcohol from closed outlets.”

But this cuts little ice with some industry veterans. WOSA’s communications manager Maryna Calow told Club Oenologique, “they are hiding behind the crime explanation. We can put security measures in place to protect shipments. The truth is that our government has not supported the wine industry for many years. It’s now flexing its muscles to teach us a lesson.”

Wine is a victim of South Africa’s problematic relationship with alcohol. According to the World Health Organisation, South Africans consume around 27 litres of pure alcohol per capita per year, one of the highest rates in the world.

So when Police Minister Bheki Cele said earlier this month, “My first prize would be that we shut down alcohol [even after the lockdown], but I know we cannot do that,” his comments were both applauded and derided.

Our government has not supported the wine industry for many years. It’s now flexing its muscles to teach us a lesson

There is no doubt that the situation is complicated and “some perspective is needed”, Mike Ratcliffe, chair of Stellenbosch Wine, suggested.

“In general I applaud the way the government has handled the lockdown, and the leadership it has shown. However, the objective was quarantine, not to destroy the economy. There are 1,200 containers awaiting export at the docks. This is a case of cutting off your nose to spite your face.”

Ratcliffe’s view is that the directives “lack practicality – the government is applying policy without logic. A lot of people are going to be hurt for no appreciable COVID-19 gain.”

Bernard Fontannaz

It is this lack of logic that for some is the clearest evidence that the government is working to an anti-alcohol agenda. Bernard Fontannaz, the founder of the major South African exporter Origin Wine, says, “If something appears irrational then there must be an agenda. There is a good deal of evidence that it is the power of the anti-liquor lobby that is driving this.”

Rico Basson

Above all, South Africa’s wine community is frustrated. While they realise the country has an alcohol problem, whether or not wine is exported will have no effect on that.

“It’s a very strange call that was made,” Rico Basson of the non-profit organisation Vinpro, which represents 2,500 South African wine industry stakeholders, told eNCA TV. He makes the point (as have others) that an export ban will have far-reaching effects on an industry which depends on exports for 50 per cent of its revenue. “The industry is in freefall, without any cashflow and any means to get to market.”

Competitiveness is also a problem. “Every day we’re not in the market we’re losing shelf space. Our competitors – Australia, New Zealand, Chile – have classified wine as an essential commodity. Our international customer base understands our situation but unless we can fulfil our orders someone else will take that space.”

South African president Cyril Ramaphosa is due to make an announcement on the government’s response to the crisis this evening. In his weekly letter to the nation he has hinted that this phase of the lockdown will end at the end of April.

This is not reassuring, Ratcliffe said. “They have changed their minds before, and they can change them again.”