What Waits for Wine

It’s impossible not to speculate about what would be waiting post-lockdown, post-Corona. Intelligent lockdown, social distancing, voluntary lockdown for the elderly, a new perspective on spending, a new type of economy… No question, we’ll have to apply our minds and be wise about it. But what will happen to business, more specifically, the wine business? The future of business is just as uncertain as our social future, but even more threatening as it affects our livelihoods.

Wine’s experiential attribute has differentiated it from other alcoholic products and given it a point of difference. This has now also become its challenge, but although the industry will suffer with the lack of tourism experiences and the drop in on-consumption, the wine experience can also be enjoyed at home. We just need to be able to sell wine for off-consumption. We all hope that post-lockdown, we’ll be able to go back to our retail and online sales channels and that people will continue to enjoy wine at home. I find it quite comforting that there is a lot of engagement and unprompted wine talk from wine lovers and consumers online. Of course, I am more focused on wine related content, but other than brands putting out their stories, consumers are engaging. This is a good time for brands to observe and listen. The new demand might have an effect on the type of wine people buy, the price at which they purchase and their expectations of online service delivery, ease of e-commerce, delivery fees, added value…

This is a positive and optimistic way to look at it, but learning and observing are only valuable if you have an industry to go back to. There are very good reasons for banning alcohol during lockdown. The South African society is diverse and complex and unfortunately, to safe many, we have to inconvenience some. I think most of us understand this. Eventually, however, the alcohol industry it is about more than not being able to replenish your stock and having your usual sundowner or few glasses of red around the braai – it is about an industry that contributes to the economy and that employs and provides an income to many.

Profitability concerns are nothing new to the SA wine industry and as in other industries, the Corona effect highlights and accelerates existing problems. That doesn’t mean that SA Wine is not an industry worth saving. Christian Eedes says on winemag.co.za: “According to a recent Wines of South Africa Info Bulletin, the weekly average retail sales value of wine in South Africa is R320 million, with the average free on board value of exports R175 million. Over a five-week lockdown period, this is close to R2.5 billion in direct gross revenue that is at risk. Suffice to say, the wine industry is set to take an enormous hit.”

Having to survive lockdown is one thing, but after the five weeks, something will have to give. We don’t know what the new regulations will be yet, but there is a very negative air around alcohol from Government side. Last week’s go-ahead for the export of finished wine was reversed yesterday with the announcement of new lockdown regulations for the additional two weeks. The allowance to transport alcohol to the harbour for export purposes have been revoked and we are back to square one. Only containers already in the harbour are allowed to be shipped. Being able to supply wine for enjoyment at home is essential – locally and internationally – and as soon as possible. While the international on-trade is of course also almost non-existent, wine sales in global retail are doing well as the ban on alcohol is not part of most other countries’ lockdown regulations. For the time being, though, most South African wines are safely tucked away in cellars and warehouses, unable to supply the chain. We are not only losing out on local sales, but internationally, also on shelf space as SA wines are replaced with available wines from other countries. Read more.

We do know that intelligent lockdown and social distancing will have to be part of our immediate future. This will mean less wine drinking in public places and less visits to tasting rooms and restaurants. We can be creative and find ways around the social challenges, share wine information and be innovative with introducing our wines in ways they can be enjoyed. Being able to produce and ship our wines and opening retail and online wine sales are, however, a no-brainer if we want to have anything left of our industry. Forbes.com quotes Rob McMillan, executive vice president and founder of Silicon Valley Bank in the US: “we don’t have to look further than Prohibition to know that people will still consume alcohol, especially if it’s a regular part of their lives.” “McMillan anticipates consumption will shift to the home, and people will order more online, buy directly from wineries, or place orders with stores that deliver. For the industry, this means a shift in sales channels, not a death knell. As evidence, the alcohol delivery app Drizly’s sales grew at a rate 50% faster the week of March 2 than the previous week, and March 12 was the company’s largest day for sales ever, according to a representative.

“We can hope that in the year’s third and fourth quarters we will see a significant demand for wine as the blow of COVID-19 regulations softens and global markets stabilise. Only time will tell,” says Francois Bezuidenhout on bizcommunity.com. Sometimes we don’t have an option but to wait it out, but while we do, I think it is essential to apply our minds to the new challenges and continuously lobby for the right to sell our product. I don’t think you’ll find anyone willing to compromise the safety of people for the production or selling of wine. In the unique South African social environment, there is no getting away from alcohol’s problematic side. But in a country with major economic challenges and unacceptable levels of unemployment, there is also no getting away from the value of an industry that contributes to the GDP and provides for the families of the 290 000 people it employs. This struggle is not exclusive to wine, but while keeping all the challenges in mind, it is not an industry we can just write off. We are resilient and resourceful, but we do need the opportunity to adapt – let’s hope it comes at the end of the month.