A close look at South Africa: the current challenges facing the wine industry

Okay so welcome everybody To wc school london’s webinar And taking a close look at some of the Challenges currently facing the south African wine industry Thank you all for joining please use the Q a for any questions And let us know what’s afterwards you’re Drinking in the chat and without Further ado i’m going to hand over to Richard banfield To introduce himself and what’s going to Happen this evening Thank you very much lydia and good Evening all i have to say while you’ve Been introducing i’ve been looking at The chat already this is the most International Audience i’ve ever seen that is Sensational Okay well we we should get a fair Variety of questions but uh thanks very Much to all of you for For joining and joining us um my name is Richard banfield I have no credentials whatsoever really For Presenting or co-presenting a seminar a Webinar on south african wines Um suffice it to say that like all of us In the business I i just love i enjoy wine i enjoy Drinking wine from everywhere in the World

And when i read an article by bruce jack Recently Where he was explaining the problems That south african producers are Experiencing At the moment it just it just struck me Very deeply that we we have to try and Do something to To help um richard will say a little bit More about The the the issues specifically but What struck me was that because the Domestic market has been closed for much Of the last 10 months an awful lot of wine that Would have been sold Hasn’t been and so you have a lot of Tanks that are still full of last year’s Harvest Just when this year’s harvest is Beginning and that’s obviously a problem Because it means that grapes could be Left on the vine And this year’s harvest can’t be made Because there isn’t sufficient Tank space so um over the last couple of Weeks I’ve just been encouraging friends Contacts Merchants anybody to do what they can to Help the south african cause uh sell More south african wine Drink more south african wine buy more South african wine

And my feeling with this without trying To reinvent the World or anything if lots of us Individually are doing what we can the The collective Impact can be quite good and if we’re Drinking more South african wine particularly in Export markets then that Hopefully will encourage the merchants To reorder and that will Create tank space so that’s the that’s The thinking behind this And wset lydia have been very supportive And obviously have a tremendous network Around the world I think south african wines probably are Exported to Pretty much every country um to one Degree or another And so hopefully many of you would have Been able to open a bottle of south African wine this evening Um do please mention what you’re you’re Drinking i can see here Uber mirror sauvignon blanc that’s very Nice you probably can’t see this Um i’m sorry richard i couldn’t get one Of your wines at short notice So i’ve got a savage wine okay i’m sure You know duncan And this is uh sorry richard you were Doing I duncan two days ago well there you go

Okay so you see hopefully you don’t Resent this too much Liz moore chardonnay good good good Choice oh there’s some beauty here Sadie oh fabulous anyway this is uh this Is his Syracuse and 2014. i have to say what i love about South africa Almost above anything else is the Quality of the blends Red and white i think they’re Fascinating So i’m going to enjoy that and without Further ado I’m going to pass this over to richard And this will take the form i suspect Richard Is quite capable of talking for the next 55 minutes on his own But i will interrupt occasionally Particularly if there are questions from The audience Or particular comments um and uh so this Will take the form of a small Interview in a way um but first of all Maybe richard you could I know you were quite keen to put the Current situation In its larger context okay i i suppose What i’ve been focusing on the last Three weeks is the Immediacy of the need to try and create Tank space

But i know you’re quite keen to try and Demonstrate that this is not this is not Just a temporary thing Uh that there are broader issues to Address from Yes um well i think thank you and it’s Lovely to be here And um welcome to everyone who’s who’s Tuning in And um i good i saw some good good Bottles being being drunk so um Um yeah i look for i look forward to Some questions later but yes the I mean the immediate problem is Certainly tank space obviously as we Head into the 2021 harvest But um the main main issue is obviously The history Over the last 12 months or 11 months Since we went into what everybody has Had which is lockdown but our lockdown Was Obviously a lot more severe um on the Basis that We felt well the government felt that Alcohol Abuse which is which is unfortunately a Common problem in south africa through Hard liquor and And other things i’m not denying why Make maybe part of that and beer But the challenge was that they wanted To keep those that Um get injury or other issues with

Alcohol are Not in the hospitals and they felt that It was necessary to have a hard lockdown In which No alcohol was allowed to be sold Whatsoever so Unlike many countries i think there was One other country that Enacted that we had absolutely no Alcohol sales from the 26th of march right through until i Think it was something like the The middle of may no no sorry it’s what I’m talking about it was actually june When we were allowed to sell alcohol Again And uh just to kind of run through that We had a second lockdown in august which Ran for another Six or six to eight weeks and that that Then was lifted and we Seem to be fine in there running up to Christmas and then we hit another Lockdown which Has been the most hurtful which started Um actually just after christmas day on The 28th And that ran until last week so we Basically also Lost alcohol sales that way but i think The immediate issue and i can If i can start from the start it would Be easier and we can run through the Various

Um issues that we’ve had over the last Three sessions um The fact was that alcohol unfortunately And it’s a political statement maybe but It is not viewed as a important industry From the government side there’s a very Strong anti-alcohol lobby Now i’m not denying that that could well Be to do with the challenges of alcohol Abuse in this country Which can lead to domestic violence and Other issues of pedestrians And so on and so forth and drunk driving Which is a major issue in this country But the challenges that Um when we had the lockdown there was a Major Misunderstanding is actually how the Alcohol business works we were told on The 23rd of march Uh which happens to be my birthday so a Fantastic evening was even my 50th Last year so even more we were told that Not only would be locked down but Anything to do with alcohol was not Deemed an essential service so We were in the middle of a harvest or Certainly towards the tail end of Harvest We were told that certainly that wasn’t Deemed essential so any All our wines and grapes fermenting or Sitting in the vineyard It was seen that we wouldn’t be able to

Even harvest them so as we entered The thursday night when we were going to Be locked down we had the panic stations That During tight negotiations we wouldn’t Actually be able to carry on the harvest And of course would lose all our wine in Tank so that was a major a major Stumbling block that was it was Addressed thankfully To our 28 to 48 hours later when we were Allowed To continue with harvest and do what we Were seen As as winemakers essential as a Viticulturist as essential we would Continue because it was a fruit So it was seen seen in a favorable light But we weren’t allowed to Bottle wine label wine and peculiarly Not allowed to export wine and this was One of the big issues because Selling wine on a domestic level clearly Is something that I understand keeping people out of Hospital beds which could be used for Covered patients Seemed a rational at the time rational Thing to do but to ban exports seemed Irrational Um but the problem is they banned the Actual transport of alcohol and that was A big Um stumbling block in fact so much so

That we couldn’t even transport our Wines Our samples i put our juice samples to The winery sorry to the laboratories Because technically we were transporting Some form of alcohol if it was If it was fermenting so it took another Week before the laboratories even Opened up and our exports remained on a Lockdown for nearly four or five weeks So that was a massive problem and That hurt us um as especially for Smaller wineries like myself Um which i i didn’t explain a little bit Maybe i should give some background We’re A small winery based in the elgin region Um we are A seen as i suppose a premium entity I started this business 2012. so we are Um very much at the sort of higher end Of of um What we make chardonnay and syrup with Pinot noir as well So and i also work with naked ones in The uk so all of our exports Uh my top my exports total about 95 Of what i sell so i have a smaller Domestic Footprint but basically were all under The same belt we could not export or Anything so that was the the first Challenge And also we had an enormous amount of

Peculiar rules Um and i think we’ve all experienced This around the world where Governments have become suddenly sort of Autocratic in their approach For example we were heading into winter So it was deemed Essential that you could buy a woolly Jumper in the Woolworths which is our local store or Lack of marks and spencers But not essential to buy a t-shirt nor a Pair of flip-flops because those were Deemed a summer Summer apparel and we should have Already bought them so it was a peculiar Situation Where you didn’t quite know what what What you were doing from one to One one minute to the other um So that that luckily we started we Continued harvesting Um and then as we um As we obviously as as smaller producers And i’m a i’m a virtual wine maker The producers that that basically rents Space like i do which means i have to Rent my seller space from a Um custom crush seller and obviously I buy my grapes in um as well as all my Overheads for barrels which are enormous And and all the various equipments and Products that you need The challenge was as we came into april

May you have You need a cash flow and cash flow was Obviously thin on the ground because we Weren’t able to sell wines Um and and just to Emphasize that we weren’t able to sell It not just on a on a local Retail basis but we weren’t selling sell It online we weren’t allowed to sell it To restaurant restaurants all closed Um so in essence we we had no cash flow For for those Almost until june as i said when we Started to be able to sell so that that Was a major hurdle Um and one that once we could sell Alcohol was a huge Relief and enabled us to start at least Um being able to do online sales and we Could export wines so that was the first The first sort of glimmer of light the Challenge was We had a very strict curfew that if i Remember correctly started at nine O’clock or even Maybe eight o’clock to start with but Then it moved from nine to nine o’clock Which meant that any retail sorry Apologies where Any restaurant establishment wasn’t able To open Because effectively they had to have Their staff back by eight or nine O’clock in the evening which

As any restaurant knows is going to Basically mean you would have to close An hour early to get the staff back So there was no restaurant so no Restaurant was prepared to open For such a small window so we had no Restaurants still open From from that way unless they did some Form of takeaway service which i know Worldwide is Was one of the answers the other problem Is you also need a there’s an awful lot Of paperwork I am i actually consult for three or Four wineries as well as Make my wine in two three sellers and i Think i carried something like 20 bits Of paper around which meant that i could Sort of Travel from here there and everywhere Just to be able to to get around And that that you know another sort of Huge i mean We love paperwork here in south africa There’s nothing nothing quite like it But um There there is a huge challenge with Having all these things which of course Changed every month because as soon as We entered the first Our lockdown originally was actually Only three weeks and then of course they Extended it like Like most countries to five weeks and

Then and then on and on and on as as You know as the crisis didn’t seem to go Be going away So so that was the the first thing um The second issue was once we came out of That Lockdown once we could sell alcohol we Were only allowed to sell it On monday tuesday and wednesday um Between the hours of 10 and six so Therefore it meant that it was a very Challenging um situation in which we had A small window to be able to sell Alcohol which was good because at least People could actually have it delivered But bad because it meant that the Couriers who were doing the delivery Were also Also doing a lot of other deliveries Like they were around the world to try To Get stuff to everybody else because Nobody could go to the shops or were Limited to where they could go So we actually had a situation where Wines were taking A few weeks to arrive um so Even though a lot of people had ordered During the lockdown they actually took Sort of Two or three weeks to actually get to Their destination and of course they Only allowed Between monday and wednesday to actually

Receive the wine outside of that they Weren’t allowed to receive it and of Course For any retail establishment that was Now reopened they were obviously earning Very little money because Although they had a nice bonanza perhaps Manage history wednesday the main sales Are obviously at the weekend And it was typically deliberately done Between 10 and 6 when A lot of people obviously were working Or at least trying to work or working From home where it was impossible to buy Alcohol so you had this slightly Challenging situation And then suddenly in the middle of it There was a increase During our late winter and um Just a bit of wine And this increase effectively sorry this Sudden Extra lockdown appeared on a sunday Night for monday morning start And um it was decided again that alcohol Was to blame And we we had a sort of uh what we what In those days we called a level four i Suppose You know all these coronavirus things Have different we had level different Levels one two three four five and Suddenly We were back down to a level which we

Weren’t allowed to sell alcohol But we had a huge amount of wine on the Road so all the couriers had to stick Their wine in their career Sorry in their vans in lorries and just Just stand there because Suddenly overnight we were banned from Actually being able to sell it again so All the deliveries that were all ready To go Were now sitting there in with with poor Conditions And not being able to move because Transportation was actually also you Know the banner it was It was banned to transport it so this Was an issue however we were still Allowed to export but Meanwhile the shipping um challenge for Us we use obviously cape town harbour Cape town harbor itself had experienced Huge amounts of Challenges because they they also had Skeleton staff during the initial Hard lockdown they had and they have Something like six teams working when It’s in full operation They were down to two teams and those Teams were not always that happy about Coming to work because they Also had various employees picking up The virus and that Led in it in turn to people not being There so now you had the problem you

Couldn’t load the ship So in fact even though we had exports we Had stuff waiting on the docks Luckily it was winter for us but it was Waiting there and it took weeks before We could actually load it up to get it Overseas Which meant that those who were selling Um couldn’t obviously get payment For several months after that when when The overseas agents You know um took receipt of that wine so So it was a A major problem on top of all this of Course we didn’t really have the The covert sort of funding that that a Lot of You know first world countries had we Just didn’t really get anything um as as Such As a company we took a i took the Decision to cut our pay by 25 percent and i was given the option to Get a loan out to pay my staff The other top-up bit just to keep them Going there was no sort of nice Government aid it was it was it was Funded by our company which we had to We only have to pay back lucky in about Four or five years time but it still Means that we actually have a A debt now that we have to then be able To pay out Um which we have been doing over the

Last um Seven or eight months that obviously did Run out once we hit that third lockdown There has been nothing since then so Unfortunately Um we had no opportunity to reimburse Our employees and that has been a major Factor because of course For those who’ve read the newspapers the Unemployment in south africa reached 37 It’s the highest in the world now it is Absolutely massive and of course A lot of those jobs um you know are in The wine industry Because obviously you’ve got a lot of Agriculture But more importantly what was also quite Bizarre is that the government lost Something like eight billion in customs And excise over that time because of Course alcohol was being banned so You have this slightly perverse Situation um where of course we’ll end Up probably paying as I would expect in higher taxes later on But that’s a political issue so i will Ignore it Um i just wanted to bring another one um Up which was um yeah as as we kind of Moved into Um october uh so One once the second alcohol ban had Lifted we started to see a massive drop As we entered our spring and what was

Likely is we had a lot of restaurants Now that were able to Open and the curfews were made slightly Later to 11 o’clock so it meant that a Full service Could could happen and operate and we Worked As a wine industry we looked at various Um [Music] Sort of incentives to try to get people To buy wines from restaurants and Restaurants themselves Needed help to sell wine through various Initiatives Which i think was a benefit in the long Run because it will help us as a Industry move closer to the restaurant Industry and for those who know the South africa industry At all it is a challenging scene when it Comes to restaurants we often get Asked to pay listing fees um actually Not just in restaurants but in In retail chains uh to have a wine Presented on their wine list and this Meant that there was a sort of A look at trying to uh remodulate that To allow for less people You know for no for for banner listings Unfortunately you know what what has Happened is of course a lot of Restaurants have gone under so we don’t Really know the true

Extent of this um and yeah Um the i suppose Yes i mean as a separate point one of The Other challenges of this cape town as a As a destination is also massive on the Tourism Trail and we obviously haven’t had Tourists really until since february Last year Uh march last year when we had the Lockdown and of course those wine farms That receive Receive um uh tourists have not had any And of course that’s meant Uh you’ve had a huge massive impact on Uh the revenue from from the wine farms Themselves Um if i can sort of expand a little bit On that We had a big emergency meeting with our Agent with our company Sorry with our industry which is called Vinpro And they have looked at ways to to deal With this Prior to the harvest um in 2021 this was Back in october To look at the ways to mop up this Massive oversupply as Richard um alluded to i think we were Looking at the time in october for A potential oversupply of 240 million Liters

And that 240 million liters was going to Be mopped up By various factions we were going to Hopefully produce 120 milliliters of grape juice um I think we were using 50 million liters For hand sanitizer Um we were going to use obviously two Years to broker maybe less Great production full stop which would Lead to itself more problems with A shrinking acreage because we have Vineyards that simply aren’t making Money so this would just Exacerbate that problem um and expedite Their downfall which is a huge problem Um but anyway um as it happens we we’ve Actually got 349 or 59 million liters Over so we actually have way more than We Had initially anticipated um but maybe If i catch up with what we’ve Currently here so i’ve got a couple of Uh points i mean Uh you know clearly um The you know the effects have been Exacerbated by this latest lockdown Because As we were going into christmas whilst Sales were brisk Um there is a huge amount of revenue After after christmas we have a lot of Visitors from johannesburg apart from Our overseas visitors and none of those

Have been around And of course um as we were trying to Get back on our feet we We haven’t been able to do that so we’re Now in a situation where Sellers are absolutely packed full of Wine there’s nowhere for it to go And that lake has expanded as i said to 340 or 50 million i can’t remember the Latest Figures of excess wine that has nowhere To really have a Fine at home it’s a huge huge issue um So i think what else did i want to say [Music] Um I think that’s most of most of it yeah Maybe There’ll be there’ll be a chance to come Back if you think about the things you You wanted to say there I i realize in retrospect that i i was So ever excited to get this show on the Road I didn’t actually introduce you which Was a bit unfortunate Um so i’m going to do that very briefly Now because it is relevant to one or two Of the questions that have been asked Um so richard is a fellow master of wine Who I’m when when i met richard he was Actually a winemaker at Mulderbosch i think uh which is a name

That will be which Will be familiar to many people in the Audience um Still producing terrific wines and uh The and richard now has so he has his Own label Kershaw um which produces single Vineyard and Single clone wines from what i Understand yes Um an extraordinary range of very Limited production Very niche but really exciting um Mainly uh chardonnay pinot and syrup It’s only chardonnay pinot and syrup and In terms of the crusher wines And for naked wines we make a slightly Extended range which includes a gsm A serbian and um and a couple of other Quirky wines barbara in in amongst and a Petty video Yeah good stuff okay so the point i want To make though Which you’ve just sort of made is that Is that richard is involved both with Um sort of boutique wine in terms of Kershaw but also something a little bit More mainstream in terms of the work That he’s doing with Uh with naked and which means that he’s Also involved with Sourcing grapes all over the cape so He’s particularly well Well informed on the situation in the

Cape at the moment Um which is just that there have been Loads of questions as you can imagine Um do you one which is very pertinent And may not be the one that’s the most Pleasant to answer Do you think that we’re going to see A lot of um well bulk south african wine Hitting the market Soon at relatively low prices in terms Of in in order to try and Free up tank space or is that already on It on route do you think Okay so i think that um there’s two Parts of this question i think that that Well i can already tell you that the Amount of bulk one has increased a huge Amount But of course the challenge is obviously As we know if we’re not the only Country that’s had issues and there’s a Lot of wine you know wine cells have Gone up and gone down depending on your Market so Although people who are retail Orientated have benefited And companies like naked wines have been An absolute godsend to us because they Are online Those businesses that are allied to Entrees whether they are in south africa France or italy have also been hit so There’s an awful lot of wine out there That is in which is lying unsold that’s

Not actually Getting to any destination so there is a Lot of market There is certainly going to be more bulk Wine um being sold from south africa And there already is we have seen that There’s definitely but um Obviously not on the scale that that is Enough to to alleviate the problem That we currently are faced with um and Sure i think the problem The problem was put nicely or horribly i Suppose by one of the observers that Having tried to Show you know after years of having good Value one we are starting to uh I would say over the last 10 years Improve our price points With high quality south african wines Which everybody is starting to enjoy and So on and so forth but of course we’ve Now knocked ourselves back to the fact That We’ve spent 10 years building it up and We’ve knocked ourselves probably back a Decade or two To a point where the value of the wines Are going to be cheap as chips As those wines are making themselves Onto the market in bulk form I saw somebody did ask about about the Amount of wine that’s exported and I don’t have the exact figures but it’s Something i think around 50 percent

But unfortunately half of that is in Bulk and that bulk often Eclipses bottled wine and i think to This year we’ll probably do that not all Years There’s been a steady movement towards Bottled wine but bulk one is definitely Now will will definitely take Precedent as the main exported wine and That’s a huge problem for us because It’s not just a question of having bulk Wine overseas but it takes You know it means that any jobs in Bottling locally is a A lost and i’ve seen it i’ve seen a Bottling we used a bottle at mulderbush With a company and they went bankrupt Because Their people started just exporting it Overseas It is a it’s a it’s it’s such a Difficult problem isn’t it we know that Bulk wine Has has many advantages environmental And otherwise And yet at the same time there’s a Tremendous cost at place of origin which We’re seeing in south america and Other countries as well at the moment And what what’s the And how is the 2021 harvest looking You’re obviously on the brink of that at The moment Yeah um what’s the mood

And what i mean what are people what are People going to do how are they Approaching it So actually that sorry i sort of almost Didn’t answer the second part of what i Was going to say and that is that What i’ve seen with winemakers i know Wine makers Who are in uh you know good wineries We’re not talking about wineries that Are not sure what to do i think That just to kind of reiter just to Iterate actually I didn’t mention i didn’t reiterate it But vin pro mentioned that between 80 And 160 wineries will probably go Bankrupt almost certainly And that will now be towards the higher Total because of the recent lockdown But what you’re finding is of course You’ve got a lot of wineries which are In good positions i.e they are fairly Successful profitable well-known to the International industry But have wine that they couldn’t bottle They decided that for example they were Only going to bottle half of the wine To you know avoid having you know too Much wine on the market because of Course they’ve lost So much sales over the last year now That Then means that they have to sell the Rest of it and some of these guys i’ve

Spoken to a few they just have no idea What to do they’ve never sold bulk wine And the stuff is the quality is great They don’t know how much it should cost Of course in many cases some of them Will price it lower just to get rid of It Which makes total sense which means that There’ll be a lot of quite smart wines You know bottle under weird labels that Would be pretty good But then obviously some of them are Pricing it too high because they assume Well This is how much it’s cost us to make And of course won’t sell at all So at the moment i heard somebody i Spoke to the other day well we’ll remain Nameless but they said then This is the most disappointing harvest They’re looking at right now Um and i can tell you right on the vine Actually in the field Is some really good fruit we’ve had one Of the most spectacular seasons Some of the coolest summer we’ve seen um Perhaps the The result of a la nina effect although That shouldn’t be so much on the coast It is amazing we’ve never had such cool Weather fantastic acidity And the crop is looking pretty good it’s Not a bumper crop but it’s looking good And

We expect something really special so it Is very disappointing and of course That leads to a second issue there’s a Sort of delusion because of course You’ve now got a lot of grape growers Who are now on who have been cut off you Know i know a number of them and i’m Just talking What i know i mean this is nothing in The wine industry but You’ve got people have made a decision Perhaps back in october To contract the grapes um hoping that The grape sales are coming i mean sorry The wine cells are going to be Continuing to go up as The that second lockdown finished and Suddenly January arrives and they’re in a massive Lockdown and now they’ve got no sales And they’re now cutting grape supplies So you’re having People who i’m speaking to have suddenly 50 60 tons of grapes That they just haven’t got a home for And they and it’s already january we’re Already now into the season where You know we haven’t got time much time To make a decision whether to take them So I think this is a huge problem and i do Know that there are will be a lot of People who will just simply Not pick their grapes they will just

Have to leave them on the vine which Will be extremely sad Um it is really sad and i suppose one of The reasons This this all struck me as desperate in The first place Is because even before the pandemic The south african business wine business Was not in an easy place I visited the cape last i think it was Four years ago Um so not recently but even then You know we were commenting on how Profitable The business is and i think there are a Lot of south african wine producers who Even then weren’t particularly Profitable and this Is obviously this has been a a hammer Blow to To many which is a matter of interest Someone has asked which Which are the biggest uh bulk export Markets for south africa do you know Yeah i think um well the uk and uk Sweden and germany i would say probably The biggest Okay do you have the statistics but um Certainly uh i i certainly germany in The uk perhaps sweden Possibly because obviously the bag in Box um but then they Also are doing bag inbox locally um so That may be that’s interesting okay yeah

So so if they can do it locally they Will probably make it locally Um yeah well i’m glad to hear that Because doing bag in box locally it Solves one of the problems locally and Obviously it is uh It’s um less weight to uh to transport As well What about canada do you is exporting Monopolies in canada i’m not aware of Exporting Um a lot of bulk to canada i have to be Honest um Obviously with the the way they work i’m I don’t i wouldn’t have thought they Wouldn’t would be doing an awful lot I mean there are um certainly the u.s There is Um a trend i know um There are companies that do a little bit Of export in bulk to the u.s And and possibly increasing so because The advantage of bottling it in the u.s Means You now have the opportunities to use Their three-tier system to sell it Directly To any state whereas if you import it Obviously you have less of a A frame to be able to export it to every State because you now are It’s already been bottled outside the Country but i know if it’s bottle in the Country you know

It is a lot easier to then sell it Directly um to any state at all Simply because it’s been bottled there But i don’t know how much is being sent In that’s to be to be fair with you no Okay um one good question here is when Lockdown we know that Um i think it’s about 10 days ago now That the Domestic uh prohibition on alcohol sale Was lifted When that’s happened and that’s probably The second or third time that’s happened Has have people gone mad and just Are there you know is there evidence of People just stocking up Into you know to to make sure that for When it happens again Um they’re supplied Okay so yes interestingly um Within a um yes with with so one one big Thing that has taken place and i think This is a universal thing but in south Africa Um it isn’t so much because our our uh Distribution is Um less so well Less rigorous i suppose but Interestingly um Yes certainly with the the lockdowns a Lot of people have bought Far more wine instead of buying the Bottle i buy a case instead of buying One case they bought two or three cases

That’s Definitely very true um and that has led To a massive increase in in sales for Um both online and of course direct to Customers so director customers really Come of Age i would say um for us as a small Business It’s been a fantastic in that sense Because we have been able to do a lot More than we usually would Um and obviously as everybody knows Direct customers a more profitable Avenue than than Than any other way so i think there has Been a lot more and there’s been a Certainly Those who in the pound seats know what They’re doing have have been out to Sell more um and yes we’ve had those Bonanzas But the interesting part of it is yes i Mean we are still in this situation i Mean even now i’m talking to you today We can still only sell alcohol from Monday to thursday So um we we we are i don’t know sorry Actually We have changed it now for wine wineries They can open Um but there still are challenges in the Retail sector so That that hasn’t gone away um and for Direct to customer of course

That’s also had a massive pressure on Careers because of course Now everybody’s doing direct to Customers so unless they have their own Career or own Driver um that has that has been Challenging But yes there’s been a huge amount of a Huge amount of increase we’ve seen a um A massive increase ourselves um for sure Okay really good so there are so many Questions here i’m struggling to get Through them all Um but uh what one um Uh let’s just just go to yeah yes i did Mean to ask in terms of the pandemic What effect is that having on workforce For the harvest and that sort of thing Is is it still We’ve talked about the commercial impact Of the pandemic what impact is it having On Manpower and local resources So in a way we were as as a as an Industry Um if you well not not perhaps now but If you’d spoken to me in october i would Have said If there was going to be a worldwide Pandemic yeah it was the best time to Have it Because we were nearing the end of Harvest and so the the the days Leading straight into the lockdown just

Afterwards We were still picking for another week Or two it was the problem so for example Obviously Sasha doesn’t sing um this was before The mosques were so Mandatory here but um social distancing Meant that buses that shipped the Workers in could only be half full So whilst we might have started picking At say hopper six or whatever Whenever the sun got up we were only Able to bring half the workforce in and Then that Next other half would only get there at Sort of 8 30. so you had a much much Slower pick Now for us personally we were on to the Syria and i don’t i’d rather have my Syrup picked a little bit later in the Day when it’s a little bit warmer Otherwise it’s Too blinking cold and we do all natural Ferment anyway So i didn’t mind that so much but you Definitely saw a huge slowdown And i think going into this harvesting Where the social distancing is still Continuing Clearly um obviously now we all have Mass wearing as well That may well have an impact on speed of Harvest pick Um and that could could it could impact

Us as we as we go forward As such we were fortunate because we Didn’t really see it so much Um during the winter when clearly Everything was in the cellar What we did see however is that if i if There are any Silver linings um we saw we had less People in the In the cellar but of course a person From a personal standpoint Um you know as you know me quite well i I um i worked out we were you know Because we had time I spent about 90 i think in 2019 i spent 93 days Outside of south africa in 1990 sorry in In 2018 i spent something like 92 days So last year i spent precisely seven Being in france And that meant i was in the seller an Awful lot more so i was able to do quite A lot of other work which i wouldn’t Normally do Um so in fact i i was much more on top Of my 2020s than Any other vintage so that was that was a Bonus but um that wasn’t obviously that Was just an offshoot For i think many others it was a huge Challenge um and clearly Um you know in larger wineries where Where you had to cut the workforce there Was there was a massive problem yeah

A number of people have commented on Normally the importance of the tourism Industry to the south african wine Business and obviously that has been Decimated or it’s been non-existent for Much of the last 10 months What examples yeah have there been what Examples have you seen of how people Producers or merchants have responded Really well to the situation Um Well i suppose um Those that i mean it’s difficult to cite Particular ones but i mean those that Have been Um much more online and have been a Little bit more rigorous in Promoting that message online have Definitely benefited um Those that have been on sort of you know In meetings and in In in areas i mean there was one earlier On today where you are Connecting with people via via video Link or Uh or on some form of social media has Definitely been uh useful Um i think outside of that restaurants That have been trying to promote wines And being helped by wineries to do that As i mentioned earlier Um has helped be an initiative for the For those for those both parties Um i don’t know in terms of outside of

That because it’s not been easy to To to be um that Innovative in fact i’ll just actually Draw a point here because One of the challenges we had after the Lockdowns was that the government Didn’t want to see lots of people Queuing up buying wine because they Thought that would be another way for The virus to spread So they were very against us doing any Advertising in fact that was almost a Condition that was put into the latest Lockdown release To avoid any advertising to avoid Anybody queuing up now obviously People will do that because they haven’t Had wine for months or weeks So it makes no sense so there’s been a Little bit Of i think an approach where they Haven’t tried to push the wine or beer Because that might lead to further Antagonization from the government in That they are You know promoting alcohol when they Should actually be not promoting it at All To to avoid having people you know end Up in hospital Yes which obviously yeah that’s right Has that Has there been any you mentioned that The government was supporting in terms

Of Loans up to a point um Is there any government support in the Vineyard In terms of um i don’t i don’t know Reduced yields or or helping supporting Viticulture supporting agriculture No nothing only support there was a There was there Obviously there was a terz initiative Which was basically based on uif Where there was a small sum paid out um To those that weren’t able to work um But that fund has been incredibly Difficult to access and also Took weeks to access for many so that That it was a huge problem Um and outside of that for Sort of other workers there’s been these Loans that have been given we we took Out a loan with a With an interest free but we would have To pay it back obviously um over the Next five years Um which get which we basically were Then able to pay our Um our workers and i mean we don’t have A big staff but The that was a way of doing it and of Course those bigger companies will be Taking on huge loans Sure they’ll have the interest free but They won’t uh Actually they won’t be getting it for

Free so there’s no benefit so no it’s Been a huge problem that no that’s That’s definitely uh A major challenge yeah do you think I mean one’s always trying to look at For the positives that can come out of Something like this I mentioned earlier that much of the South african wine industry was already Not particularly profitable this is Going to have Tipped some companies over the edge do You think that A reckoning was maybe necessary And that actually the industry could Emerge stronger and more robust In some ways as a result of this I think that um if i yes So the upside could well be that Obviously those that were in In challenge in financial challenges Could arguably Have entered financial challenges prior To covid and the covert has just Exacerbated Their challenges so in a way they were Unprofitable Um so that certainly is is maybe a part Of that I think though the two issues that we Will have is obviously wines that were Destined for export and were not Exported will be dumped in the local Market

And sold off as cheap as chips prices That will have a massive Negative impact on on our pricing Locally because people will pick up Stuff for nothing Um and they will happily sell it at cost Just to get rid of the stuff And then secondly i think that the Growers themselves are faced with a very Uphill battle Many of our growers have held up prices Steady one or two have reduced the Prices But the price of vineyards um has not Changed there is still a massive need to Be profitable And most vineyards are not so that would Be very difficult and of course You know a lot of people will now not be Buying from some vineyards and that will Then have a massive impact Financially on the farmer at a time when We’re expecting you know thousands more Hectares to be grubbed up And unfortunately as as those that Follow south african wine a lot of those Will be older vines Um simply because they just don’t Produce the yield and although some of Them are You know some of them are well known and Won’t be ripped up some of them are less Well known unfortunately Don’t quite make it onto the labels of

The the superstar producers so We’ll be ripped up and just simply be Lost in the fray and that will be sad And so um unfortunately that thing Having said that Less less grapes may be a benefit in the Long run perhaps in In a few years time but i don’t see i Think the problem is is that this will Continue for the next two years because Obviously we’re not going to get rid of That amount of wine That we’ve now accumulated this year and Then we’ve got a new harvest coming in And despite the fact that one can make Plans and strategies as to how much You’re going to sell in 2022 We just no idea you know we would like To feel that there’s going to be a huge Sort of you know somebody said a sort of Golden age you know what the 1920s the Swinging The 1720s like it was in after the Spanish flu and we’re all going to Suddenly be buying wine like by the Bucket Um but who knows maybe we are and we Will quickly get rid of Through that wine or but maybe we’re not Going to be we’re going to be a little More cautious But i think the biggest problem is i Think and worldwide is the fact that the Goal posts have changed so

You know where before you could you Could say well we’re going to sell this Much through restaurants this much Through Um off licenses this match online Everything has changed and the problem Is now we all have to change with it And those that have the smartest and Brightest strategies will be the ones That win And those that don’t have a strategy Will will be the ones that lose I think it’s i think it’s absolutely True i mean through all of this i think It’s really important to keep track of Trends In the key export markets and how to Make sure that south africa is Positioned to make the most of those It’s been mentioned in the questions That If you take the uk and i think in some Other markets as well germany as well Uh both keg wines and canned mines Particularly Are gaining traction and i know i’ve got A tasting of canned wines this morning In the uk and several of them Actually were sourced from south well The wine was sourced from south africa And i think that given that south African uh bulk wine is Is particularly good value at the moment Sadly good value

Um i’ve thought south africa is really Well placed to make make the most of That particular opportunity Yeah i mean you know i mean if there is An opportunity It’s a rather sort of um it sounds a Rather Nasty way of saying this but i mean you Know there’s been a lot of interest from China obviously Um because south africa has has Generally not done that brilliantly in China And um um obviously now with the with With the challenges of political issues With australia there’s an opportunity For south africa to To work harder at selling those wines Unfortunately we don’t have an agreement Like chile or new zealand so we We will be paying 15 more but there Again our wines are 15 Cheaper anyway that may well be um You know a chance and an opportunity who Knows um But yeah it’s uh uphill battle Yeah there’s a there’s a question here An open question which might have been a Good one to end with but i like it so We’ll have it now Um okay what is the best way for us to Help Um uh buying essay buying south african Wine donating to charities generating

Awareness How do you see we we have people from All over the world here Yeah what what’s ossiam what’s your Positive message Well um i’ve been speaking to a lot of People about this and i think that You know it’s a tricky one with charity Because obviously You know there’s been amazing Initiatives here and i mean you know my My wife was involved with the soup Kitchen um and And all that sort of thing we also Donated to help um Get people fed and you know at least Have a decent meal um During the during the during the Lockdowns um but i think that can all Work from this side you know that that’s What wineries are good at Um um and others you know we we’re a Community of apple farmers here as well We’re not just wine Um but i think the concept of buying South african wine will help The fact that more wine will be sold Which means that there’s more Opportunities for us to To go forwards because it’s always going To be the effect that you know we need To sell more wine that that’s that’s the Honest answer Um you know and and i’m a pragmatist and

I You know i worry charity is good but Unfortunately in a country where You know we we are not known for being That straight and a little bit more Corrupt I you know i worry that that charity Doesn’t end up with the right people so You know here here um as my wife said i Mean she’s a she’s a big Person when it comes to charity she and Actually as bruce mentioned in his Article You know being out there serving soup That’s an absolute direct charity thing There’s no question there’s no There’s no um if i can say that That You know it’s a direct thing whereas you Know on the other side from From from afar and buying the wines from South africa themselves is already a Major bonus because it enables us To to have more wines being sold and Especially if you can buy them in a Bottle that’s Perhaps in bottle here i’m not saying That’s a necessity but It definitely helps us in the sense that You know i mean just to give you an Example our bottle Cup the bottling manufacturer is almost Bankrupt in south africa Now that’s not through unfortunately

Through wine it’s through beer because Obviously the beer industry has been Very badly hit Um but that is a major problem we only Really have one bottle supply in south Africa so if it goes under that’s a Major problem So you know if we can buy them from South africa that that would be great And um you’ll see that with a little a Number on the back that will Show that it’s been bottled here um That’s the that would be my message Okay thank you richard a couple of more Delicate issues here i guess which okay Yeah address if you’re happy to One question is i mean obviously The south african government is very Concerned about alcohol abuse And particularly during lockdowns hence The domestic ban What part do you think the wine industry Plays in that And the question specifically says um What parts it play As a result of liquid payment Okay in terms of liquid payment it plays No part that is not a system that is Used Anymore um payment is all done you know There’s no No company i know i mean it’s illegal For a start um the wine industry would Account for a very small fraction of

That i mean The honest answer is that it is a huge Problem with Hard liquor and beer and of course A lot of a lot of that is then made Locally obviously in those provinces Where they can then sell it off um and And Sell it out it certainly won’t be from Um Bottle wine i mean we we’d certainly had Problems back in the back in the day And you know that that was at the top System which which you’re referring to The liquid sort of cells is is illegal And also the and also putting it into What they call a pap sack which um It’s a rather sort of um a dear term That sounds like a good thing but it was A basically a bag in box without the box So just a bag and the bag was like you Know 10 or 15 liters and you You would sling it behind you and just Sort of suckle on it that is all illegal You can’t do any of that anymore And therefore in a way the winery cart Doesn’t really Um apply in that sense to to the Challenges um that we’ve had and in fact If one looks at it a lot a lot of the Problems have been um certainly in the Eastern cape And up in jerberg where where they’re You know there’s there is a lot more

Hard liquor sold and Beer um i mean we have to put it into Rational terms the average amount of Wine drunk as africa is something like Seven or eight liters per head per year Um It’s not a lot um you know we still have A lot of where A lot to go before we have another a Real wine drinking culture So i wouldn’t really say that it was Such a valid a valid thing and certainly Not in A liquid payment terms no Okay and that the other another on the On the more delicate side How can in the past the south african Wine industry has been Accused of racism how can how can end Consumers be sure that south african Wines are produced in fair conditions Um well i think that charge has been Leveled by there was an investigative Sort of report done on that a few years Ago and it was leveled at two wineries In particular and those two wineries are Are known and that’s something that Was unfortunate um i wouldn’t really say It’s a particular thing i mean i don’t Encounter it at all Um anymore i mean it’s not really Something i’ve encountered Personally since i’ve lived here um i’m Not saying it doesn’t happen

Um but i wouldn’t really say that was That was something that was that Relevant To to the whole industry i mean you know For those who know the cape very well we Have different cultures here So um we don’t just talk of black and White we talk of black white and Coloured So whilst there is um the colour Community is very much The mainstay of what who who work in the Wine industry and the black Culture is very much also in the Industry but not quite at the same level Because it’s it’s it’s more populated With colored And that’s a different it’s a different Sort of dynamic um I i would say if anything the challenges Are that we have obviously an awful lot Of Um overseas you know i mean just just in Our wineries there’s there’s a lot of Malaria and zimbabweans Are there’s massive amounts of Zimbabweans um So i don’t you know i don’t really Really see that that as a major major Problem at all um And in fact interestingly i think in Many cases the Um challenges are not a wine industry Relation

The problem has the problem where the Racist Card has been played especially in south Africa is the fact that the black Economic empowerment or broad-based Black which is the bbe Um sector is very difficult in Agriculture because Unlike main main industries where Shareholder value can be attributed or Split up to various Um uh parties and they can have a solid Sort of revenue in a factory that makes Widgets or whatever it does The winery is a problem because you need To buy land and land is hugely expensive And you are likely to not be profitable From great many years And unfortunately therefore it means That for those bbe Uh projects to happen they need a huge Amount of capital to get get into Into the industry in the first place Because they can’t afford the land So now you have this challenge where Therefore the land is Is still occupied and and by families Who have been there for generations Um and although there’s a lot of Initiatives Um on the ground um it isn’t always to Do with land that’s that’s where I would say the arc that the biggest so The

In a way the industry or certainly the Government struggles with the fact that That’s not happened that transformation But it’s unfortunate never really going To happen that much anyway because of Because of that problem and and if i put It into really stark terms The fact is is that you know i was Talking to a guy Um and anybody listening here is living In a selling watch probably will be um Out there for me but you know in selling Boss if you look at the price of land Per hectare no wine should be under a Hundred grand it wouldn’t make any money That way And i can tell you now how many wines Are under a hundred 100 round is about Five pounds in south africa Where our taxes are very low that would Translate into uh Probably about a 15 pound wine in the uk No wine under that will be Is in fact any wine produced under that Is actually making a loss Because if you look at the land values It’s about 100 000 euros per hectare So there’s no way you can be making a Profit on that So arguably there’s no way anybody would Buy into that as A black empowerment project because it’s Completely untenable Um simply because there’s no way they

Can make money and and This this is the problem it just doesn’t Work um And i think that’s always been a um a Challenge i think it was always a Difficult challenge as Much as one has tried to make it work It’s it’s not really worked Is is there any sign i mean looking to The future you say that there’s Um vineyards will be I mean obviously grapes will be left on The vine this year and vineyards will be Grubbed up because they’re no longer Profitable And yet at the same time we know that in Many markets premium of south african Wines Are selling pretty well and they are Beginning to command High prices yes are there any Organizations or bodies or cooperatives That are raising funds To save these vineyards how would people It may be one area that some people can Support Is actually by by joining funds to try And save some of these vineyards because That premium end of the market it struck Me as being It strikes me as being growing faster Than the bulkhead of the market in Recent years Okay i think obviously this is a

An interesting question and and i will Try and answer it in as brief as time as Possible but The biggest challenge that we have and We’ve always had this in south africa is That we have A top we’ve always had this sort of um Sort of top-down approach where We’ve we’ve showed the world what we can Do in the premium sector And we can do do it with a plum i would Argue and i’d like to think people Feel that we can where our wines can Command a premium price Not necessarily the highest premium Prices that you can see from other new World countries But certainly attract premium price our Challenge has always been our biggest Three suppliers don’t dominate the Market as they do in places like Australia Or california or or america um and of Course those They can not just dominate the market But they can then supply their Respective markets in places like the uk Where Supermarkets take 70 percent of their Volume because that is 70 Of their trade so ultimately what the Problem is is that Our big so our big three should be about 77 to the market where

No one touches them they are they can Work on a very small margin of about 32 Percent gp They can sell happily because of volume And that’s how they operate and they can Produce fantastic wines Of that of that ilk to to a thirsty Market in any country the world What the problem is is that you then Have the 30 which should then be the Highest premium wines In our country our 70 is only literally I think 35 percent We have very few well-known brands when You can consider Um you know you know we’re the ninth Biggest producer in the world we have Literally we have a kamala and a few Others but there’s very little That are commanding those sorts of Prices across the range From those big three i mean i think one Would struggle to To really feel what those were i mean Perhaps nederberg would be one of the Candidates that would Could could encompass that um but when You consider A place like australia where they’ve got A variety of larger Wineries that cannot just come out at Sort of a you know a cheap level like Penfolds but also go right up to a very Very quality product

Where people are prepared to pay the Highest prices we don’t have any of that Um so what that creates is an Interesting um Paradox because when we are pricing our Wines when i mentioned earlier about Being a hundred grand All our premium guys should really be at Over a hundred round or two hundred Because They can’t compete at that under under a Hundred round we should be leaving that To the big three to To fight over and work towards selling Those to the supermarkets But what we do is instead we compete With them and by competing we actually Mean We actually instead of you know we Should be working towards a 50 Gp or or higher 70 percent is is the is Where we should be but i mean obviously Many don’t manage that If we did that we would actually be much More successful But unfortunately we don’t we work and Compete with the i mean You know we actually have brands that Compete with a big three i mean For years van liveren’s four cousins was The biggest brand on the market and They’re a private winery Um you know they weren’t they’re not Actually one of the big three but they

Are so massive If they they can compete adequately at That level that To me is is is great for them obviously They’ve done a fantastic job marketing But it means that we clearly have been Adequate inadequate at marketing From the big three so even though that’s Probably um Again they probably won’t like me saying That but i’m just i think what we’ve Done is we’ve always ended up having Um you know wineries that sell overseas They have premium wines for sure but Then they can produce this Sort of easy drinking cheap and cheerful One and we go yeah we’ll have some of That i think because we haven’t got Anything in our portfolio From one of the big three to to match That um And i think that’s always been the Challenge so what it also then has an Impact is that if you have a wine at 30 round or footy rand and then you have One at 140 and 150 and i’m sort of Talking in rand so we can compare You know five dollars ten dollars twenty Dollars it’s very hard to justify a wine Then a hundred two hundred three hundred Dollars Simply because you can’t say well then They make a five dollar wine Um so yeah that that would be

Slightly naive perhaps but uh just a Sort of a general thought on on where The challenges lie there Oh gosh it’s i mean it it would be so Helpful if south africa did have some Stronger Wine brands i think one of the aspects Of australia that you’ve mentioned that Has been so strong Is because they do have the strong Brands at retail Supermarkets find it easier to work with Them And if you do want to turn on volume Promotions through supermarkets other Way to do it and If you haven’t got strong brands it’s Very very difficult to To do that so i agree with you totally That Lovely though it would be to concentrate On south africa being a producer of Fabulous boutique wines the reality is That it’s got to get better At selling the the branded wines as well I think that’s very true Um we have richard there are so many Questions and i feel very inadequate Because I’ve got through about half of them i Think but we are going to have to Um close it off there thanks so much for Your participation Both in terms of the questions the chat

I tried to keep in touch with all of That but It failed um in in many ways terrific to See so many of you drinking Really good south african wine i think All i can say is richard has said and i Think this is so true Unfortunately the the impact of the Current situation is going to be felt For years to come at least two years to Come And so i know Lots of wine countries deserve our Support Um but i do just do hold a place for South africa Make sure that you continue to support It particularly at the moment I think right now in the immediate Future it’s the country that needs our Help more than any other And i i would love to think that as an Industry Uh and i i use that word guardedly as an Industry as a wine trade I would love to think that in future we Can react To these situations more positively And speedily than we are on this Occasion Um hopefully more of that in the future But that’s something that So many conversations to be had out of This and let’s let’s hope that we can

Draw some positives from it as well Richard thanks very much indeed you’ve Got to get back to Vintage you’re managing your team of Pickers tomorrow Or maybe i’m not sure but um but uh but I hope so And good luck with the vintage uh i Think many of the audience will look Forward to staying in touch with you and Looking out for kershaw wines wherever We can find them in future Well thank you and thanks um and thanks For everyone to To to be being so supportive i’m seeing A lot of messages on the right hand side Here and You know it it’s fantastic it’s great to Be here and explain the Explain the situation here okay thank You thanks richard thanks lydia thanks Wrct Good night good night bye