Wine industry runs out of storage due to ban - R1.5b's worth could be lost

A new harvest is imminent and there's no more space for unsold wine. We have the highest stock level ever - Vinpro's Rico Basson

The local wine industry is sitting on a huge reserve of stock that couldn't be exported or consumed domestically during the course of the lockdowns last year.

"At the moment we have the highest stock levels ever in 360 years" says the managing director of Vinpro, Rico Basson.

At the same time the industry is preparing to harvest the next grape crop.

To say the situation is dire would be an understatement, Basson tells Bruce Whitfield on The Money Show.

Wineries still have capacity to crush, but unless they can start clearing the existing stock in the tanks within a month they will run out of storage space.

Wine is agricultural, so we only harvest once a year and that harvest will be over the next ten weeks.

Rico Basson, MD - Vinpro

Half of the wine is exported; the other half obviously sold domestically but we've been in a ban now for 18 weeks - that's four and-a-half months!

Rico Basson, MD - Vinpro

Every week that we don't sell that's R300 million not coming to fruition to these wineries.

Rico Basson, MD - Vinpro

If you can't sell... other options would be to not make wine but rather take the juice and make concentrate or hand sanitizer and even things like industrial wine. But those aren't profitable options.

Rico Basson, MD - Vinpro

The last resort, he says, would be to leave the grapes hanging in the vineyards.

Most of the wineries still producing are small, with a turnover of less than R10 million.

The strain on the system was severe in 2020 he says and 2021 will likely see foreclosures, mergers and a switch to farming different produce.

That's where the casualties and some of the foreseeable business closures will come in.

Rico Basson, MD - Vinpro

It's got a ripple effect when you look at the economy and survival, and cash flow.

Rico Basson, MD - Vinpro

To plan without knowing when the ban will be lifted makes it extremely difficult for these wineries.

Rico Basson, MD - Vinpro

Listen to the conversation on The Money Show:

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