Stellenbosch – home to some of South Africa’s most famous wineries – faced a steady decline in the number of its grape producers and vineyards before the Covid-19 pandemic, according to Elmarie Rabe, general manager of Stellenbosch Wine Routes and marketing manager of Visit Stellenbosch. But a series of blows dealt to the industry in the form of alcohol sales bans in 2020 further exacerbated irrecoverable losses. SMF News spoke to the sector’s tourism experts and wine producers to gauge how it has adapted.
The decline in Stellenbosch’s private wine cellars can be attributed to a combination of the effects of the Covid-19 pandemic’s lockdown restrictions on the alcohol production and sales industry, in addition to pre-existing economic issues. Grape production yields less profits in comparison to citrus, for example, according to Elmarie Rabe, general manager of Stellenbosch Wine Routes and marketing manager of Visit Stellenbosch. INFOGRAPHIC: Talia Kincaid
Purple wisteria and Sagewood trees decorate the dust-ridden path that one would take to find the home of Tamboerskloof wines, Kleinood Wine Estate. Situated in close proximity to the slopes of Helderberg mountain, Kleinood spans only 12 hectares, says owner Gerard de Villiers. But what the farm lacks in size, its production makes up for in quality, he says.
The farm is run by De Villiers, his family and a handful of farm workers, he says. After Covid-19, the wine farm scaled down on its employees. “Overnight we lost all our staff. They just couldn’t come in and work. But the family kicked in to help so we could process the rest of our harvest,” he says.
This followed a series of governmentally implemented restrictions on the domestic and international trade of liquor during the height of the Covid-19 pandemic, says De Villiers.
Owner of Kleinood wine farm, Gerard de Villiers explains that he was lucky enough to have the support of his family to take care of the farm after the South African government’s alcohol bans between 2020 and 2021 contributed to the loss of his staff. AUDIO: Talia Kincaid
A lasting effect
The pandemic “really tested the Stellenbosch wine industry’s resilience”, says Maryna Calow, communications manager for Wines of South Africa. She adds that that pre-pandemic, the Stellenbosch wine route was one of South Africa’s highly regarded tourist attractions.
The town was once alive and bustling with tourists and wine enthusiasts. They frequented the quaint bistros and quality restaurants that lined the streets, sipped chilled Sauvignon on vineyard tours and attended tastings offered by top-quality wine farms, but it all “came to a standstill”, says Calow. “The ban of the sale of alcohol had a major effect on the industry: wineries couldn’t open, people couldn’t travel outside of their homes and businesses came to an abrupt halt.”
These prohibitive regulations to the South African wine trading market also played a role in decreasing the region’s grape harvests, states Elmarie Rabe, general manager of Stellenbosch Wine Routes and marketing manager of Visit Stellenbosch.
Stellenbosch’s wine industry bodies have increased their use of sustainable harvesting practices after a series of alcohol sales bans following the Covid-19 pandemic saw a decrease in the number of grape yields, according to Elmarie Rabe, general manager of Stellenbosch Wine Routes and marketing manager of Visit Stellenbosch. PHOTO: Talia Kincaid
Facing new challenges
The South African Wine Industry Survey recorded a decline in Stellenbosch’s primary grape producers from 162 in 2019 to 137 in 2022. “Stellenbosch’s agriculturally zoned land is under constant pressure to be rezoned and developed,” says Rabe. After the pandemic destabilised the country’s economy, it became “more profitable to plant citrus or blackberries”, she says.
This meant that for Stellenbosch’s grape producers, shifting their planting strategies directly influenced the region’s production figures and in turn, its growth, says Rabe. Those, such as De Villiers, who continued to produce wine, had to rethink their sales and marketing strategies to combat the loss in revenue and rising inflation levels. But it was not only small-scale grape farms that were impacted.
“A day that you haven’t had sales is a day lost. You can never recover that – that’s my philosophy,” says Gerrit de Villiers, a contracted liquor supplier for Shoprite. He sources alcohol from cellars located in the Boland area, which includes Stellenbosch, Paarl and Worcester, according to Gerrit.
At one stage, Gerrit recalls being unable to sell alcohol for over three months. “A consumer can’t drink in the past tense, so you can’t ever recover that. It was a major loss,” Gerrit says. During that period of time when the ban was in effect, he and his family did not earn any income, he adds.
However, due to working for a larger company such as the Shoprite group, Gerrit says that his business did “recover from a volume perspective”, and this was because “the demand was always there, we just weren’t allowed to sell directly to the consumer”.
De Villiers explains that during the period of the ban, Kleinood’s survival was owed to the business relations that he had forged with overseas clientele.
Pre-pandemic, Kleinood sold 60% of its produce to local buyers, says De Villiers. When restaurants closed and the alcohol sales ban came into effect, he was forced to rely on the European market. This market was willing to pay in advance for shipments that would only reach them once the trading ban had been lifted, he says.
The result of this shifted their distribution ratios indefinitely. “We now supply 60% of our wines to the overseas market, and 40% is local,” he says.
Small-scale wine producers were forced to strengthen their ties to international markets after the South African government banned alcohol sales and exports during the Covid-19 pandemic, says Gerard de Villiers, owner of Kleinood, a small wine farm situated along Blaauwklippen road in Stellenbosch. PHOTO: Talia Kincaid
Adaptive reality
“One of the biggest issues [experienced after Covid-19] was skills drainage,” says Rabe. “The industry is making way to create new jobs but this puts a lot of pressure on businesses as skills training is heavy on financial resources.”
This, coupled with an overall trend indicative of declining alcohol consumption levels, has forced wineries to adapt to the shifting landscape, says Calow.
Rabe attributes this to decreased earnings which have driven “consumers with reduced disposable income to turn to cheaper wine options”, she says, adding that a generational shift sees younger target markets drink less wine and turn to lower-alcohol or zero alcohol beverages.
De Villiers similarly states that “people don’t drink in the same way they did 10 years ago, and restaurants are now driving the sale of alcohol-free products to deal with this because as it stands, people are moving away from restaurants as well”.
This prompted a shift to online sales, De Villiers says.
“The need for an increased online presence has shifted the wine industry, which was previously, largely traditional,” says Calow. “During Covid-19, many wineries turned to social media to keep the ball rolling.”
Because of this, direct-to-customer and online sales have “grown tremendously”, Calow says. Consumers were forced to purchase their alcohol online and have since formed a sense of trust with online platforms, she adds.
However, the online market is “a difficult one” and it’s very competitive, says De Villiers.
“[Kleinood’s] wine is expensive, so online doesn’t really work for us, we work better with direct-to-customer sales,” he says. “People would rather go to a Woolworths or a Tops and buy from the shelves.”
This has delivered a decrease in both the volume of sales and the average sale price, subsequently reducing revenue and profit margins for wine producers, “particularly in the premium sector”, according to Rabe.
“These trends are being experienced internationally, and South Africa is no different,” says Rabe. “Increased production and distribution costs necessitate cost-cutting measures” while fostering a need for innovative solutions to drive customer sales, she says.
It is vital that producers realise the importance of the online sector as it stands against “a volatile retail and hospitality sector”, says Rabe who adds that despite this, the return of tourists and local visitors has put a “renewed energy into cellar door interactions”.
Many wineries and restaurateurs anticipated this and used the period of the ban as an opportunity to “make changes and upgrades to their infrastructure”, says Calow.
De Villiers attests to this, having “used that period well” to upgrade Kleinood’s tasting areas, which he believes has improved the winery’s tourism.
“Wine tourism earnings are on the up and up,” says Rabe, who adds that visits to farms, restaurants and farm accommodation “was excellent in 2022 and looks the same for 2023”.
The Stellenbosch wine industry has seen an increase in American tourists in recent years, which can be attributed to an increase in direct flights from the United States, says Maryna Calow, communications manager for Wines of South Africa. INFOGRAPHIC: Talia Kincaid