South Africa’s wine tourism sector is crucial to sustaining the economy, as well as the livelihoods of more than 36 000 people employed in the country. Unfortunately this has also been one of the sectors hardest hit by government’s restrictions to curb the spread of Covid-19 since March 2020.
A study commissioned by the wine industry body Vinpro, The Economic Value of the South African Wine Tourism Industry 2019, was conducted at the start of 2020 to establish a benchmark for wine tourism, and has since been used in all proposals to government to de-risk the sector. A total 113 wine cellars that crush grapes and typically provide wine tourism facilities, participated in the study.
Revenue earner, job creator
Wine tourism is a significant revenue generator for the South African economy having contributed R7.2 billion to GDP in 2019. This includes direct expenditure of a visitor at a wine farm, indirect expenditure of goods bought by wineries from other local businesses to deliver the tourism service, as well as induced expenditure by the wineries’ employees at shops.
According to the study, the wine tourism sector directly employs between 8 464 and 10 233 people, depending on the season. Allowing for the indirect and induced impact of the sector, it supports more than 36 000 employment opportunities in South Africa.
Restricted trading hours, the specific exclusion of on-site consumption of alcohol and ban on domestic overnight leisure travel (intra- and inter-provincial) and supporting services like accommodation and air travel have an adverse effect on the sector.
“We estimate that wine tourism has lost more than R2.5 billion in revenue between March and July 2020, with the majority of these losses incurred at the tasting room. This will inadvertently have a severe effect on profitability, employment and the financial stability of the communities that are dependent on this sector,” says Marisah Nieuwoudt, Vinpro wine tourism manager.
While the turnover from wine tourism activities represented nearly 15% of wineries’ total revenue, micro wine cellars with a turnover of less than R10 million per year are most dependent on wine tourism, which represents 41% of their total turnover. “It is especially the small and micro enterprises that do not have sufficient bridging finance to sustain them through the current and continued restrictions,” Marisah says.
Vinpro estimates that the entire wine industry, which consists of 2 778 wine grape producers and 533 wineries, could lose more than 80 wineries, 350 wine grape producers and 18 000 jobs over the next 18 months due to the previous and current bans on exports and local wine sales. This scenario could worsen should the ban continue past the current level 3A restrictions that are in place until 15 August 2020.
Proposals to government
“We have and will continue to use The Economic Value of the South African Wine Tourism Industry 2019 study as a resource to unlock revenue streams that contribute most to wineries’ much-needed cash-flow,” says Marisah.
Proposals to de-risk the sector, signed by all nineteen wine routes, were submitted through official channels including the district municipalities, via the Department of Economic Development and Tourism (DEDAT) to the National Department of Tourism and through the Tourism Business Council of South Africa (TBCSA) directly to the National Coronavirus Command Council (NCC).
Close to 88% of the total wine tourism revenue comes from wine tasting, overnight accommodation, food and beverage and conferences and events, with variation between regions.
“We welcome the announcement made on 30 July 2020 by the Minister of Tourism, Mmamoloko Kubayi-Ngubane, that restrictions relating to personal movement would be relaxed to allow for domestic overnight leisure travel within province of residence. Our wineries’ accommodation offering accounts for 25% of their total tourism turnover and this is strongly driven by leisure farm-stays,” Marisah says.
The biggest generator of tourism revenue at winery level is, however wine tastings and sales that take place at the cellar door. “We are encouraged by the Cabinet’s willingness to enable more profitable operations for our restaurants by moving the curfew to 22:00, allowing for an uninterrupted dinner service,” Marisah says.
“It is critical that we have sufficient demand at the right times to justify re-opening our tourism services and operating them profitably. The restricted trading hours permitted for the off-consumption sales of alcohol, for example, would not translate well to on-consumption, because restaurants and tasting rooms generate most of their revenue in the evenings and on weekends.”
Vinpro has also updated the schedule of tourism services permitted according to the respective lockdown alert levels.
VIEW THE WINE TOURISM SERVICES SCHEDULE
(as on 30 July 2020)
Wine tourism sector’s commitments
In a survey by the SA Wine Routes Forum (SAWRF) among 104 wineries, the majority indicated that it would be viable for them to operate their tasting rooms at a percentage of their total capacity during a phased exit from lockdown, with less than ten team members on site and administrative support working from home.
Wine tourism destinations have also pledged strict compliance with the health and safety protocols issued for the wine tourism sector by Vinpro and the SAWRF, along with the guidelines issued in Notice 356 by the Department of Tourism on 29 June 2020. These include social distancing, limited occupancy, infection prevention measures, cleaning and sanitization guidelines and organisational and operational protocols, as well as prominent messaging on the premises to Covid-19 safe practices by visitors and staff.
“The wine tourism sector is committed to safe and responsible trade, promotion and consumption and will do all that is necessary to save lives, protect livelihoods and start rebuilding our sector and economy,” Marisah says.
Vinpro communications manager
Tel: 021 276 0548