Hundreds of South African producers forced out of business every year
In the past ten years, 900 wine producers in South Africa have failed, with around 100 going out of business every year, which is putting a further strain on the country’s unemployment figures, according to Rico Basson, managing director of Vinpro.
Last year revenues from the wine industry contributed more than R36bn to the national GDP, and provided over 300,000 jobs. The industry’s return on investments was less than 1% last year due to the drought, compared with 2% in 2015, said Basson, speaking at the Nedbank VinPro Informationa Day held in Cape Town.
Not only has South Africa lost hundreds of producers, but also around 1,800 hectares dedicated to vines in the past two years. Wine production is currently around 400 million litres, with the value of exports at R9billion.
The recent bushfires sweeping the country have done little to help producers struggling to survive.
Shehnaz Somers, the head of commercial underwriting at Santam said the recent outbreak of fires in the winelands of the Western Cape had brought the issue of the producers’ risk to the fore, with a number of wineries adversely affected.
“Our claims team is assessing about 50 claims related to the recent fires, most of which are related to buildings and vineyards, but it is still too early to report on the extent damage of the damage,” she told Business Report.
Last year fires destroyed vineyards in Stellenbosch, Overberg, Simonsberg and Kogelberg resulting in losses of around R240,000 per hectare. Somers said it could take betwteen five and seven years for an average vineyard to become productive again after a loss or significant damage.
“The destruction of vineyards by fire, crime or weather related events also has a significant impact on the overall production volumes which in turn places international exports and recenues and ultimately the lievelihoolds of those communities engaged in the wine producting sector at risk.”