Virus booze ban causes headache for South African winemakers

WELLINGTON, South Africa – Wineries around Cape Town fear a 9-week alcohol sales ban will leave a bad hangover that outlasts the coronavirus pandemic, as South African bottles lose their spots on international shelves and thousands of jobs are lost.

Africa’s most industrialized economy shuttered liquor stores at the start of a strict anti-coronavirus lockdown on March 27 to limit the spread of COVID-19, and reduce pressure on busy emergency wards.

The controversial booze ban was lifted on June 1st as part of a gradual easing of confinement measures to limit the economic setbacks of the pandemic.

But wine producers in the valleys of South Africa’s Western Cape province are concerned the industry will struggle to bounce back.

The alcohol sales ban was coupled with a 6-week export freeze – raising concern buyers could turn to suppliers in other countries if demand abroad was not rapidly met.

“We were the only country in the world where wine exports were not allowed,” said Boyce Lloyd, chief executive officer of South African top wine and spirits producer KWV.

Lloyd said buyers in key importing countries such as Canada, Finland, and Sweden removed bottles that did not meet a minimum sales rate.

“When you do not have stock on the shelf obviously you can’t record a sale and then you get delisted,” he said.

“That is a very real risk we are facing.”

Delistings and delays

At the Nabygelegen wine cellar in the southern town of Wellington, owner James Mckenzie said international buyers had grown nervous about “putting all their eggs in one basket.”

“They are now looking at importing other countries’ wines in case there is a problem again,” Mckenzie told Agence France-Presse. “Those are long-term decisions which may affect us over the next years.”

The risk of being delisted has been exacerbated by delays at ports due to coronavirus outbreaks among staff.

The Western Cape is the hotspot of South Africa’s epidemic, with more than half of the 92,681 cases.

Cape Town harbor staffers have not been spared.

“What we have been seeing in the last few weeks is major hold-ups at harbor terminals,” said Wines of South Africa spokeswoman Maryna Calow, a non-profit that promotes wine exports. “They are currently running on a 50% capacity.”

Only 55% of KWV wine exported this month had arrived on time, down from the usual 90%, according to Lloyd.

Delays could be as long as 3 weeks, he added. 

The ongoing closure of South Africa’s borders and lockdowns across the world have also made it difficult for wine producers to import packaging material.  

“I’m talking about cork from Portugal, glass from Europe,” Calow explained. “There is a major delay and backlog there.”

Meanwhile, cellars bursting with unsold wine barrels could cause a drop in bulk price due to oversupply by year-end.

The combined effect could be devastating for South Africa’s famed wine industry, which employs around 300,000 people.

Glimmer of hope

“We are estimating around 18,000 jobs to be lost due to…bans on the sale of alcohol,” Calow said, adding that at least 80 wine cellars in the area risked shutting their doors in the long term.

A bleak scenario that could be compounded by the accelerating spread of the coronavirus, as South Africa hurtles towards an expected peak of infections in July.  

Every confirmed case forces a winery to shut down operations for at least a day to sanitize premises and isolate contacts.

Lloyd estimated the company had lost between 10% and 15% of production time over the 3 weeks.

Suppliers of boxes and labels are also affected.

“So you might be waiting for certain raw materials to arrive today for packaging tomorrow and you get a call from the supplier saying they are impacted by COVID.”

One glimmer of hope has been a spike in online wine sales, which skyrocketed after the alcohol sales ban was lifted. 

But courier companies have struggled to keep up.

“People have not had access to liquor for two months, so you are dealing with a substantial buildup of orders,” said Lloyd. – Rappler.com