Ban on wine sales in SA was 'surprising', says head of international organisation

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A survey found the drive to promote more premium wine purchases is the biggest growth opportunity for SA wine.
A survey found the drive to promote more premium wine purchases is the biggest growth opportunity for SA wine.
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  • The International Organisation of Vine and Wine hosted a webinar to review the state of the global industry.
  • According to its managing director, the total ban on the sale of alcohol in SA was a "surprising" move.
  • It is estimated that the wine industry is running at a R7.5 billion loss due to Covid-19, lockdown bans.


The ban of the sale of alcoholic beverages in South Africa during the harder coronavirus lockdowns was "surprising", according to Pau Roca, director general of the International Organisation of Vine and Wine (OVI).

From the OVI headquarters outside Paris, France, Roca hosted a webinar to provide a review of the current state of the global viticulture sector.

South Africa was not the only country that cracked down on liquor sales in response to the coronavirus pandemic: Spain, Kenya, Vietnam, Greenland and Lebanon all implemented some form of restrictions on liquor sales for a period in response to Covid-19.

However, OVI said, sales data in SA was illustrative of the broader impact.

"The decline in the volume of wine sales in SA shows the impact of the lockdowns and the new prohibition. The market ban was surprising, but that is just the way it is. It led to a significant reduction in the domestic consumption and trade also with neighbouring countries like Lesotho," said Roca.

On the export side, though it seems SA did not suffer that much as the ban was only implemented within the country.

Standard Bank's head of agribusiness, Nico Groenewald, says that, according to Wines of South Africa (WOSA), the wine industry is running at a R7.5 billion loss due to Covid-19, lockdown bans on sales and exports, and alcohol sales not being allowed over weekends. "During the early restrictions under the national lockdown the wine, tobacco and floriculture industries were among the hardest hit by the ban on sales during lockdown, but they are now steadily picking up," he said.

Dawie Maree, head of information and marketing at FNB Agriculture, says SA's agricultural sector was the only shining star in the economy in 2020, escaping the effects of the Covid-19 pandemic relatively unscathed, but with the exception of some industries like the wine industry.

Global trends

In 2020 global wine consumption fell to its lowest level since 2002 due to coronavirus lockdowns, including forcing bars and restaurants to close or limit their hours.

Roca said the consumption of wine in the world has decreased by about 3% in volume to about 234 million hectolitres, mainly due to the impact of the Covid-19 pandemic and a decrease the last few years in China.

"We were thinking China was the driver in consumption, but we cannot think that anymore. Just remember Asia is not only China," he explained. 

Another trend has been an increase in online sales, which he regards as offering a big potential for the industry.

A factor which will play a part in the recovery of the wine industry, in his view, is the rebounding of the tourism industry. The tourism industry has also been heavily impacted by coronavirus travel bans.

Environment

Asked about the importance of environmental factors for the industry, Roca said for the wine industry to be sustainable, the whole industry must grow on an environmental basis.

"It is not that difficult. Our strategic plan, ending in 2024, will probably show the viticultural system is fully sustainable and respects conservation aspects. We can be an example to other industries," he said.

Recovery

For Roca, the impact of the coronavirus pandemic on the wine industry has been about the same as that of the 2008/09 global financial crisis.

"If you look at the second semester of 2020, the impact was not as bad compared to the enormous impact in the first semester. So, indications are that the wine industry is going to recover quite fast. Of course, we still don't know some things like price recovery in some markets, but it will probably be a similar situation as before. Let's hope," he said.

SA survey

Commenting on the recently released inaugural Great BIG Wine Survey by Hollard, Christo Conradie, wine producers' body Vinpro's manager of wine business, said while the Covid-19 pandemic and its ripple effects will be felt by the industry for a while, it's critical to understand the latest consumer insights, conduct further analysis, and present recommendations to an array of players along the wine supply chain, specifically in the local market.

According to TOPS at SPAR Wine Show producer Andrew Douglas, a survey interesting finding indicates that through customer engagement with online content, or via the targeting of those already engaged, it can be expected that those customers will pay an average of 22% more per bottle for wine.

An interesting anomaly in the research, for Douglas, is that - while the majority of the respondents claim to prefer red wine - the wine industry produces more white than red.

"Up to 53% of the respondents stated their preference for red wine compared to about 15% who prefer white. As expected, the preference for rosé, sparkling and white wine was weighted towards women, and red towards men," he said.

According to the survey report, the drive to promote more premium wine purchases is the biggest growth opportunity for South Africa. "To achieve this, the weighting of stock-keeping units should be towards red wine. If white wine sales delivered better volume, velocity and margin, there would be a case for focusing on white, but from global experience, this is not the case so a shift to red makes more sense," it states.

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