Positive vibes from the Cape

Regional & Country Focuses

After the turmoil of the past few years, David Williams finds South Africa’s wine industry in ruder health than might have seemed possible in the darkest days of the pandemic

 

All wine-producing countries have difficult periods from time to time. All have to deal with the slings and arrows that come with shifts in the weather and climate, politics, economics, consumer fashions and regulations. But few wine industries – at least in peacetime – have had to endure the sheer range of challenges faced by South Africa over the past four years.

The period began at the tail end of three years of an extreme drought that greatly depleted production: the 2019 harvest was the smallest since 2005.

By the time production had got back to something like normal in 2020 (up by 8.2% on 2019) we were … well, we were in 2020, which, while evidently not an easy time for anyone, was particularly hard on South African wine producers.

The severity of Covid-19 in South Africa – by far the highest case numbers and fatalities on the African continent – was matched by the severity of the government’s response. In the period from March 2020 until New Year’s Eve, 2021, when the last set of restrictions was lifted, the South African wine industry had to cope with four separate and complete bans on domestic alcohol sales which, put together with the pandemic-long ban on weekend sales in the off-trade, amounted to several months of lost trading.

This was coupled, in the early days of the pandemic, with an on-off, on-again ban on the transportation of goods to ports. The de facto export ban lasted for five weeks in total, shutting off vital streams of cash flow to businesses already prevented from trading domestically (domestic sales and exports generally account for around 50% each of South African production). It also caused a host of knock-on effects, with producers unable to get their hands on vital materials such as corks, bottles and other dry goods.

With ports running at significantly lower capacity even after the ban was lifted (as little as 25% of normal levels), exports were constrained well into the autumn of 2020, since when South Africa has had to contend with the same delays in the global shipping industry as the rest of the world.

At the same time, South African wine has also suffered disproportionately from the effects of successive travel bans imposed by domestic and foreign governments. The industry is unusually reliant on tourists from the UK, the EU and the USA, both in terms of spending money on wineland hospitality, and in spreading the word internationally.

According to industry body VinPro, the combination of lockdowns and travel bans directly led to a loss of 75,000 tourism jobs in the Western Cape in 2020, with a further 21,000 jobs in the wine industry put “at risk” by the restrictions.


On the way back up

There is no doubt that the turmoil of the past two years has placed enormous strain on the South African wine industry. The loss of domestic sales has been disastrous for those businesses – many of them small, a significant number black-majority-owned – that have yet to build up an export presence. The process of rebuilding and recovery – particularly in the wine tourism and domestic markets – is clearly not going to happen overnight.

However, recent news coming out of the country has been significantly more positive.

The end of all Covid-based restrictions on the sale and export of alcohol accounts for some of the tentative optimism coming out of the Cape at the beginning of 2022. The return of tourists in what remains of the country’s summer tourism high-season, after the relaxation of omicron-inspired restrictions by successive governments, has helped lift the mood.

What’s really helping South African winemakers look forward to the future with a measure of confidence, however, is the resilience of its exports, which have survived and thrived despite the unprecedented conditions.

According to a 2021 export report issued by Wines of South Africa, exports of South African wine grew by 22.1% in volume to 388 million litres, and by 12.1% in value, to R10.2bn (£500m) in 2021.

The figures were particularly good for the UK, which, the report said, had “been particularly supportive of South Africa’s wine industry during one of the toughest times it has ever faced”, the support trumping any fears that a combination of Brexit and Covid would create a “negative impact”.

The UK’s imports of packaged South African wine rose by 10% in volume and by a remarkable 25% in value, with independents and “high-end multiple grocers” finding the Cape to be a particularly attractive source of affordable quality wines, at a time when many other countries, in both Europe and the new world, were struggling with rising prices and supply issues.

Other markets that have proved fruitful include China, with the South Africans taking advantage of Australia’s well-documented trade-war travails in that country, while South Africa was the only new world country to see its exports of packaged wine to the UK in growth.

Bulk wine, meanwhile, had a more than usually important role to play in 2021, helping to fill the vast gap lost by the drastic fall in domestic sales. According to WOSA, total bulk sales rose by 33.6% in volume, and 23.1% in value to 242.6 million litres and R2.4bn (£120m) respectively.

No less important in shaping a more upbeat mood around South Africa is the quality and size of its recent vintages. With the size of 2020 already a significant improvement on the drought-hit 2019, 2021 was seen as the year when the vines seemed to have largely recovered: the crop was up by almost 9%.

Word on the ground is that the quality is also high, among the best in recent memory, which brings us to perhaps the single biggest reason to feel encouraged by the prospects for South African wine in 2022.

Despite everything, the quality revolution that has transformed South African wine in the 21st century has not slowed. The country remains arguably the most exciting and dynamic wine producer in the new world, with a cast of talented adventurous winemakers continually finding new terroirs and stylistic avenues to explore. Making and selling wine in the Cape may have its challenges. But, the prospect of what the best South African winemakers will do with the fruit of one its finest recent vintages is mouthwatering.

Related Articles

Menu