Abstract
Background: One-third of wine producers in South Africa are experiencing negative net farming revenues. The wine industry is close to the heart of South Africans and South Africa is known for its production of quality wine in the world. However, the wine-producing sector faces many difficulties that threaten its survival. Besides the possible impact of the land reform drive of the government, the industry is experiencing financial and operational pressures, which have been exacerbated by drought and high temperatures affecting the crops. These factors affect not only the wine producers but also the complete wine supply chain.Objectives: This article provides insight into the supply chain risks of producing wine. The study was conducted among wine producers in the Stellenbosch region of the Western Cape province of South Africa.Method: An exploratory, qualitative, case-study approach was adopted in this study. Data were collected through in-depth semi-structured interviews with 10 participants at five wine producers’ sites selected on a non-probability convenience sample basis. Thematic analysis was used to process the data.Results: The most critical supply chain risks factors identified through this study centre around the sourcing of dry goods, agricultural activities, wine-making activities and financial risks. It also came to light that the wine farmers do not formally analyse their risks.Conclusion: Wine producers can put in a greater effort to improve the relationship with suppliers of dry goods and they will more efficiently mitigate some risks if they actively analyse and manage their risks on an ongoing basis.
Highlights
Key focusCurrent business trends are increasingly prone to complexity and uncertainty in the supply chain
The purpose of this study was to identify the risks experienced by wine producers in the Stellenbosch region of the Western Cape province, South Africa
The findings revealed that the main risk factors centred around the sourcing of dry goods; agricultural activities, including the drought and other external hazards; wine-making activities, including in-process controls; financial risks, including margin erosion because of inflationary costs not being matched by selling price increases; and human resource risks
Summary
The South African wine industry started in the Cape Colony in 1655. It is the oldest industry in the country (Wines of South Africa [WOSA] 2017). South African wine producers face financial and operational difficulties, which manifest as risks in their supply chains. This may negatively affect the future sustainability of their businesses. The context of this study is the South African wine industry, the supply chain risks it faces, and the strategies used to manage these risks. Chain risk is an event that adversely affects supply operations and its desired performance measures and cost It is the likelihood of a disruption that will affect the ability of the business to continuously supply products and services (Tummala & Schoenherr 2011:474). They are risk identification, risk analysis and assessment, risk response treatment and risk monitoring and evaluation
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