Cape Drought Impact

EDITORIAL CAPE DROUGHT IMPACT: WINEMAKERS FEELING THE PRESSURE

How will it affect our tavern trade?

South Africa is the world’s seventh-largest wine producer, producing 3.9% of the world’s wine. But that could soon change. Our wine industry, which exports 440 million litres of wine a year and sells 400 million litres locally, has reached a challenging stage in the harvest season and is expecting to see the smallest harvest in more than a decade. This is due to the continuing drought and low water supplies in the Western Cape, coupled with white-frost and black-frost damage in the Breedekloof, Robertson and Worcester regions. After three years of below-average rainfall (425 mm, 452 mm and 397 mm annually against the usual average of 800 mm per year), the region is in a severe drought. Areas of grape production without water storage dams and/or access to other sources, such as boreholes and rivers, will have little or no crop at all. The 2018 harvest is expected to be much smaller than the estimated 1 434 328 tonnes of grapes produced in the 2017 crop, based on a survey conducted in late November 2017 by industry body, South African Wine Industry Information and Systems (Sawis). “We are experiencing the biggest drought that I can remember. Luckily, last year we drilled a borehole, and we also have two dams on our property and another dam on our neighbour’s farm that we can irrigate from. Of the vineyards that we have, we suspect that the crop will be down by 10%–15%. So far, the quality looks good as we are having very cool nights, so the colour of the reds will be good. At this stage, the crop looks to be two weeks later than last year,” says Mike Malherbe of Laibach Vineyards in Stellenbosch. But the general outlook for the countrywide industry is poor. Francois Viljoen, consultation service manager for wine industry organisation VinPro, says the declining trend predicted in the past two months can be attributed mainly to the warm and dry weather conditions experienced in early December. “Virtually no rain fell during this period and many hot days (above 35°C) were recorded. Together with a persistent south-easterly wind, this increased the water consumption of vineyards.” With drought conditions prevalent in the Western Cape for the third consecutive season, major dam levels are currently

around 26.6%, compared to 41.6% in 2017. Most producers depend on water from the various irrigation schemes, which has been rationed since early in the 2017 growing season. Water quotas have been cut by between 50% and 80%. “This available water is simply not enough to meet the needs of the vineyards at this stage,” says Viljoen. “Vineyards are now beginning to show symptoms of water shortage and declining berry growth. Smaller berries mean a lighter harvest with lower juice levels, which contribute to lower volumes.” “This challenging season has a negative impact on producers’ income potential, but lower stock levels and smaller international crop yields now also provide the opportunity to give momentum to a structural income adjustment,” says managing director of VinPro, Rico Basson. “Businesses now have to focus on the appropriate packaging of what they have to offer when discussing price points. Opportunities created by the drought crisis must be fully exploited to benefit the producer in the long term.”

How will it affect the availability of wine stock for the tavern owner, and will we pay more?

Although wine shelves won’t suddenly be empty, the wine shortage will create an opportunity for the industry to compete at higher price points. This will filter down and negatively affect consumers and those who buy in bulk, so we should expect a price increase. Liquor City, which offers one of the largest selections of wines in the country, has taken the stance to protect its customers against shortages and increases by planning well. “Within the main market, we have always had great sales numbers on the natural sweet rosé wines and other sweet wines, but some of these varieties, such as the Cabernet Sauvignon and red blends, are increasing,” says Byron Locke, marketing manager for Liquor City. “We have prepared well in advance and currently have well over 1 million bottles of wine available within the Liquor City group, which excludes box wines.” Liquor City owner and founder, Manny de Atouguia, negotiates the brand’s own wine labels with various wine farms to save customers money. “We are able to sell premium wine at a lower price to ensure that our customers save money. The only difference is the label is ours and houses the Liquor City brand. The content of the bottles is 100% the result from the wine farms themselves,” concludes Locke.

Table grapes ready for harvest

Facts and figures about the South African wine industry

• An estimated 1 434 328 tonnes of grapes were produced in the 2017 crop. • There are 3 145 primary grape producers in South

Africa. • It takes 600–800 grapes to produce one bottle of wine. • In 2016, a total of 568 wine cellars crushed grapes. • South Africa’s winemaking tradition dates back to 2

February 1659, when the first grapes were pressed. • South Africa exports around 440 million litres of wine annually. • Currently, 95 775 hectares of vines producing wine grapes are under cultivation in South Africa, over an area of 800 kilometres in length. • South Africa is committed to sustainable wine farming. • Chenin Blanc is the most widely planted varietal in

South Africa.