SA wine producers on tenterhooks as exports to Russia, Ukraine on hold

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The total value of SA wine exports to Russia in 2021 was R207 million.
The total value of SA wine exports to Russia in 2021 was R207 million.
Yuki Shintani / Getty

Wine producers – who are still reeling from the impact of Covid-19 – are facing further uncertainty due to the Russian invasion of Ukraine.

While Russia represented about 1.8% of South African wine exports in 2021 - the pandemic had already caused a drop in exports to the region - the year nonetheless saw a total of 6.9 million litres of wine leaving SA for Russian shores. The total value of exports to Russia in 2021 was R207 million.

A key concern, one said, would be if payments via the SWIFT system were disallowed. This comes after the European Union, along with the US and other Western partners, announced sanctions on Russia for its invasion of Ukraine that included cutting off a number of Russian banks from the SWIFT interbank payments system – a secure system that facilitates fast cross-border payments, easing international trade.

Tim Hutchinson, executive chair of independent wine and spirits company DGB, with brands like Bellingham, Boschendal, Douglas Green and Tall Horse wines, said the company has done good business in both Russia and Ukraine in the past – markets that seem to prefer SA's red wines.

"Our business is actually stronger in Ukraine than in Russia," he said. "Most of our distributors anticipated problems leading up to the conflict and increased their stock. So, there is not an immediate problem of supply," said Hutchinson. "The real worry going forward is what will happen if Russia is barred from the SWIFT payment system. Then they will not be able to pay us."

Any DGB shipments that were due to leave for Russia and Ukraine are currently on hold. Until the conflict is resolved, it remains a "wait and see" situation, he said.

Another local producer, whose estate exported three to four containers of wine to Russia per year – worth about R1.5 million to R2 million in total – added that the impact of the conflict could mean local producers would have to "start all over again" to market wines in the region at a later stage.

The producer, who requested to remain anonymous but whose identity is known to Fin24, said in recent years marketing to Russia had intensified as it offered "good opportunities" but that these were also "a bit inconsistent".

Johann de Wet, executive head of the De Wetshof wine estate, said it exports only a minimal amount of wine to Russia each year, "just like a number of other SA cellars".

"Our business relationships with Russia are not on a permanent basis. We have not been in contact with our Russian agent since the situation in Ukraine started," added De Wet.

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