South Africa’s wine industry will not be saved by the eased lockdown rules

South Africa’s drinks industry has been hit hard by the ban, with wineries unable to make, sell or export products. Credit: Bernard Pieterse / Shutterstock.

On May 24, South Africa’s President Ramaphosa said that retailers will be able to sell alcohol under strict conditions on specified days for limited hours. This represents a partial reversal of a blanket ban on alcohol and tobacco sales as the country went into lockdown. Could this help to save the ailing industry, and if so, how long will it take?

The ban came into effect on March 27 to reduce the pressure on hospitals due to Covid-19, and to prevent a rise in domestic violence. The restrictions were eased at the beginning of May as South Africa began to emerge from lockdown. According to John Hopkins University, as of May 28, South Africa had 25,937 confirmed cases of coronavirus, and 552 deaths.

South Africa’s drinks industry has been hit hard by the ban, with wineries unable to make, sell or export products. Wines of South Africa, a not-for-profit industry organisation that promotes the export of South African wine, estimates that export revenues lost during the ban amount to ZAR1bn ($57m).

In response, the South African retailer, Pick n Pay, has announced an online pre-order system for the sale of alcohol upon the relaxing of the rules. E-commerce sales will be subject to the same rules (sales will only be permitted between 09:00 and 17:00 and may not be consumed on site). The company claims it has had a 200% increase in online custom during the period of the lockdown, and it expects a surge in demand. The lockdown has forced many consumers online, making e-commerce an ideal channel to organise sales for when the ban is lifted.

Despite the announcement on the easing of restrictions, bars and restaurants, key distribution channels for on-trade alcohol will remain closed due to their higher risk of spreading the virus. With the wine producers’ main routes to the consumer closed off, the South African wine industry is unlikely to recover quickly. Drinks producers globally are expected to see large declines this year, with a return to normality likely several years away. This is only likely to be more severe in South Africa due to the decisions made when designing their lockdown.

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