The state needs to see the wine industry as a national treasure
With its world-class product and high job numbers, SA’s wine industry really needs the government to puts its money where many mouths are
Covid-19 has left the SA wine industry in a state of chaos. Radical action is necessary to prevent long-term retardation. The multi-pronged agenda of the government’s alcohol ban needs a counterbalance to address the severe demand shortfall and its far-reaching effects.
The following is a way forward, using the international sales and strategic government support to rebalance the markets.
Successful implementation in the short and medium term will establish a sustainable path for the longer term. Success will bring comprehensive benefits across the entire tourism ecosystem. More so than ever before, this is the time to look for the win-win.
Let’s look at what Covid-19 had done and is doing to the SA wine industry, an industry that directly employs about 300,000 people. Over the past nearly five months, local sales have been almost totally banned. Export sales were banned for a period of about five weeks. The ports are operating very slowly, causing significant delays. International buyers are, in many cases, prolonging order lead times.
Added to this, payment delays are resulting in huge cash-flow issues for wineries. Tasting rooms have been closed since late March. Tasting room sales in the forthcoming “tourist season” will be dramatically hit due to the absence of foreign tourists. Job losses are now in the tens of thousands, and permanent, long-term damage is virtually assured.
One should also consider that restaurants (which are suffering enormously) have very low investment capex in comparison to wineries, which have very high capex (the winery, the vineyards, the barrels and the inventory). Profitability can take decades. It is worth bearing in mind that in 2019 — probably the best year ever for the industry — only 30% of wineries turned a profit.
From our vineyards to end-consumption, locally and internationally, it is the ultimate achievement of the full value add — a product that is now world-class. Locally, further value is added by the proliferation of world-class restaurants, with SA wines being part of the highlight. It is hard to find any other SA industry that captures so much of the value chain.
In a crisis, the impossible becomes possible. This is an appeal for government sponsorship and support for a significant international marketing campaign. Up to now, Wines of SA has been industry-funded — no government funding at all. SA competes with marketing bodies such as Wine Australia and Wine New Zealand, which are generously funded by their governments. To compete, the industry needs help so it can be better placed in the medium and longer term.
The SA wine industry is a national treasure. The French view theirs in this light. Why not us? I believe the distance traveled over the past 10 to 15 years in terms of wine quality is enormous. The international perception can be changed to reflect the progress achieved. A well-funded campaign utilising existing creative talent could alter perceptions significantly.
Wine is a ‘message in a bottle’, it is ‘bottled sunshine’, it is the only SA ‘takeaway’ that is of high quality and can be delivered all over the world to serve as a reminder for tourists to keep SA at the top of their travel wish-lists
If one were to look at an example of world-class marketing, it is worth looking at what the Swartland Revolution has achieved. It created a market for products that did not exist and managed to put SA wines on the map internationally. No doubt it created jobs in areas where there were limited jobs before. The Swartland Revolution campaign was a home-grown SA strategy, which underscores the talent that exists in the country.
If SA launched a Cape Wine Revolution and managed to increase SA’s wine market share by just one percentage point, from a global market share of about 3% to 4%, and increased average selling prices by 25% over five years, the combined increase would completely change the profitability paradigm and the long-term sustainability of the industry. It would create many jobs.
Forgive the cliché, but wine is a “message in a bottle”, it is “bottled sunshine”, it is the only SA “takeaway” that is of high quality and can be delivered all over the world to serve as a reminder for tourists to keep SA at the top of their travel wish-lists. To remind them to visit for the food and beverage extravaganza that exists locally.
I started Oldenburg Vineyards more than 17 years ago. As an international investor my view was that the Cape had the potential to do something outstanding in terms of wine. The people, the climate, the history, the tourism potential all made my future investment too good to resist. I have now invested several hundred million rand.
We employ more than 40 people. During Covid-19 we have not furloughed anyone, nor made anyone redundant. Oldenburg, like many wineries, works on a multitude of upliftment initiatives. We support a local childcare charity. We are like many other wineries, but we need the government to carry its share of the burden.
It is time for the government to step up. First, recognise the gem, the national treasure that is the wine industry. Recognise the almost limitless potential the sector offers for tourism, jobs and tax revenue. We need a five- to seven-year commitment of significant funding for an international marketing campaign, to re-rate our wines in the eyes of the global consumer and increase demand to help balance the market.
A successful campaign will dramatically increase visitors who eat in our restaurants, visit our tasting rooms and stay at our hotels.
Help us avoid disaster. Help us work to ensure we can realise the tremendous possibility that exists within the SA wine industry and together build a brighter future for the many hundreds of thousands who work within it.
• Vanderspuy is proprietor of Stellenbosch winery Oldenburg Vineyards.
Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.
Please read our Comment Policy before commenting.