Covid-19 and the South African wine industry

Abstract

ABSTRACT South Africa has faced multiple waves of COVID-19 infections since March 2020 with various levels of economic restrictions imposed to control the pandemic’s spread. Such actions included intermittent bans on alcoholic beverage sales, which have had a substantial impact on the wine sector. This purpose of this paper is to quantify this impact, using a partial equilibrium simulation model to separate the direct impact of sales restrictions from the indirect impact of collapsed GDP growth and consequently also consumer spending. In 2020 alone, it points to a reduction in domestic sales and in exports as a result of the pandemic and the efforts to control its spread. The subsequent stock build up induces a prolonged period of weaker prices, and combined with additional actions imposed up to the end of July 2021, cost actors in the industry R3.6 billion in primary gross production value from 2020 to 2027, even without accounting for further value addition between bulk sale and retail value.