Defend Truth


SA wines are being pushed off international shelves as a result of the lockdown


Martin Wohlfarter is a recent MBA graduate from the Graduate School of Business, University of Cape Town. He is currently on a six-month exchange at the Copenhagen Business School, Denmark, taking courses in EU Policy, Strategic Change Management, Strategic Market Development and Negotiations. He also consults to an Agri-Biocontrol Research Consortium, Collectif TIS in France, focusing on Market Development of Sterile Insect Technology in Europe, as a tool in Integrated Pest Management.

It is time for organised agriculture to become proactive in shaping SA’s future. The industry requires a clear and well-communicated vision. It can no longer rely on ‘boer maak ’n plan’.

It’s obvious that South Africa’s agricultural sector was poorly prepared for the government-imposed lockdown. Harvests, transport and exports have ground to a halt. 

In primary agriculture, farmers essentially have the same goal – to produce quality crops or animal products. They are generally happy to leave marketing, market access and exports to industry bodies, growers’ associations and exporter forums. However, even these bodies are lagging behind and farmers, labourers and rural communities are bearing the brunt.

Many of us are familiar with the over-quoted statistics of primary agriculture’s low contribution to South Africa’s GDP (2%). Yet we all need to eat. And in times of global shutdowns, the rapid movement of fresh produce is even more critical. 

This extends beyond commercial exports, such as daily herb flights from George to Zürich, Switzerland, and beyond the informal economy of ‘bakkie traders’ who collect directly from farms to supply informal sellers of produce on pavements, at traffic lights and in spaza shops.

For now, I will focus on organised agriculture and more particularly the formal wine market. I grew up on a wine farm near Bonnievale in the Western Cape. My father, an engineer with no previous farming experience, learned from his neighbours how to grow vines. He personally meticulously trained each one of his 37,000 grapevines.

In the early 2000s, Merwespont, the cooperative winery we delivered our grapes to, appointed a new manager. He came from the corporate world but said he had a plan – a vision of growing bottled exports. After the 2006 triple-merger between Merwespont, Nordale and Bonnievale cellars and some re-branding, the new cooperative had significant volume under one brand. 

We began exporting to Sweden. The Scandinavians had steadily increased their annual wine consumption to above 20ℓ per capita, ranking the 4th highest wine consumers in Europe. Years later I was proud to find a bottle of Bonnievale Cellar Cabernet Sauvignon on the shelf in System Bolaget (a government-controlled liquor store chain) in Karlstad, Sweden. The vision had become a reality. In 2019 Bonnievale Cellar underwent another merger, growing its capacity by a further 14% and increasing its prominence as an export player.

Few wineries are big enough to deal with the demands of large EU supermarket chains. Late last year, Kobus van der Watt, a lecturer at GSB commented on the lack of coherence within the SA wine industry to pool sufficient volumes for export and highlighted missed opportunities. He was referring to the huge unmet demand in China. Under the current conditions, not putting all our grapes into one basket was not such a bad idea.

Today, I live in Copenhagen, Denmark. The night Prime Minister Mette Frederiksen announced restrictions on gatherings of people (maximum 10 persons) and suggested a two-week closure of restaurants, cafés, bars and clubs, I went to my nearest supermarket, Føtex, to take a look. People were panic buying toilet paper, pasta and canned tomatoes. The giggling shop assistant told me about a guy who had just bought a years’ worth of dental floss. Madness! I bought some milk and SA wine.

That same supermarket is well stocked with a variety of goods and fresh produce imported from all over the world. Cheeses from France, Switzerland, Holland, the UK, salad, tomatoes and tasteless citrus from Spain, small avocados from Chile, olives from France, berries from Morocco and Portugal – Denmark is a net food importer. Føtex also has an expansive international selection of wine. Of South Africa’s 4.2million hectolitre wine exported in 2019, Denmark represented the 6th most important market by volume at 16.5-million litres and 7th by value at R384-million, down 19% from 2018. Neighbouring Sweden imported 17.9-million litres at R495-million during 2019, representing the 4th most important market by volume and 5th by revenue. Combined, the two Scandinavian countries represent only about 9% of SA’s export volume – just under R900-million.

A mere 4.8% of wine imported to Denmark comes from SA, with about seven labels representing the bulk on the average supermarket shelf. Three are very familiar brands, one of which encroaches on the Vaaljappie market. I don’t even think they’ve ever changed their label during the last 30 years, while others have ludicrous ‘exotic’ labels showing SA scenery and animals. 

Back home in South Africa, these same brands have way more appealing and classy labels. I cannot fathom why some marketers think that overseas buyers would be tempted by bland, hideous labels on SA wine. But, patriotic as I am, I bought them, even though the cheaper Argentinian Malbec is better!

Just for the record, it was R155 for the cheapest SA Chenin Blanc compared to R88 for the cheapest Italian Pinot Grigio (R2.25 = 1 DKK). During the past month, after the recent credit ratings downgrade, the rand has dropped 18% to the Danish Kroner.

Making dinner for a Danish friend the other night, I reluctantly had to serve a French Chardonnay. Why? Because stocks of SA white wine have been low for three weeks now. Three weeks! That implies insufficient delivery before the SA lockdown, suggesting prior supply problems. It’s no good blaming EU borders being closed or containers being stuck in Rotterdam or Hamburg. We still receive fresh raspberries from Morocco daily.

When President Ramaphosa announced the lockdown starting on 26 March, I immediately read the Disaster Management Act, 2002: Amendment of Regulations Issued in Terms of Section 27(2) Gazetted on the 25 March 2020. It was only once friends in the wine industry had taken to social media to express concerns about the transport of wine to ports that I realised the implication of Section 11B, subsection 6(a); “All borders of the Republic are closed during the period of lockdown, except for the transportation of fuel, and essential goods.” This was supported by Annexure B, section B on Services, which made no provision for the transport of non-essential goods such as wine to warehouses and ports. Therefore, on top of the local sales ban of alcoholic beverages, crucial exports and export-related functions could not be performed.

I was stunned to read about farmers having trouble harvesting and transporting grapes to cellars – grapes being considered by the government as non-essential goods. Within two days of the regulations being promulgated, Vinpro (a representative body of South African wine producers) managed to convince the government to allow harvests to continue. Vinpro has furthermore been very active in sharing updates on the progress made in lobbying the government since the lockdown began. Yet, some crucial matters remain to be resolved.

According to the “Covid-19 Q&A: Wine Exports” as published on the SAWIS (SA Wine Industry Information and Systems) website, wine exports by sea or air could resume from 7 April. Export by road across borders to neighbouring countries was still prohibited. Furthermore, bottling, filling, labelling and packaging was also not permitted. And producers of labels and packaging materials were not allowed to perform these services as they were considered non-essential.

A considerable shortage in export volumes will persist for the time being, while wineries battle with storage capacity. When a mine shuts down, the price of precious metals goes up. Agricultural produce, however, has a shelf life and cannot be stored indefinitely. Aged wine is more valuable, you say? Bear in mind that wine farmers are generally paid for the vintage in instalments, as it is sold. This means income is often spread over two to three years, whereas production costs are immediate. 

With a lack of supply, market access laboriously negotiated over years can quickly be lost as supermarkets need to keep their shelves stocked. The prime space that SA wine occupied a few weeks ago has since been filled with Italian and Australian wines, with our wine being moved to the lowest corner shelf.

At the 2019 Hortgro Symposium, William Gumede of the School of Governance at the University of the Witwatersrand made the comment that (commercial) agriculture needs to present government with solutions to the land debate: “Every sector will have to take its own leadership now. You cannot wait on the state…”

In this context, when the industry does not engage timeously with the government, what can the latter do other than follow its immediate agenda? The debate over what are and what are not essential services is a case in point. Government’s willingness to amend the regulations indicates that it understands the consequences, but it would have been better for the agricultural sector to have consulted with the government before the regulations were announced.

Organised agriculture needs to step up to the negotiating table with proactive plans and solutions to guide the government. It can’t continuously be left to ’n Boer maak ’n plan. Agri SA’s statement calling for understanding and considerate conduct in agricultural value chains during the COVID-19 lockdown period…” is about the most useless words I have read in a long time.

Farmers have enough on their plate, looking after their business, their labourers and the larger community! This is why they hand responsibility to industry bodies to represent them. High-value agricultural produce, crucial for SA tax revenues and forex gain, all too often gets stuck in the value chain. This is not due to lockdown regulations, but because of the industry’s lack of foresight and vision.

The government needs to be lobbied and advised timeously. DM


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