The South African wine industry (Vinpro) has warned against further alcohol restrictions, which it says have given rise to a major illicit market and caused significant damage to legitimate businesses.
Because this illicit market is outside the government’s regulatory reach and operates uncontrolled, it leads to devastating consequences from a health and economic perspective, the group said.
“The liquor industry is already heavily regulated. We urge the government to stop these crisis-driven Covid-19 related prohibitions on wine which have promoted the development of parallel illicit markets, plunging our industry into a financial abyss and reducing much-needed government revenue,” Vinpro said.
“We want the government to combat illicit alcohol trade and create fair and open competition in the domestic market by enforcing the laws that already exist.”
Vinpro said that the wine industry had suffered irreparable damage through the Covid-19 pandemic – from a large number of small and medium wine businesses, particularly in the wine tourism sector, to wine grape producers and cellars, which include several black-owned enterprises – with 28,000 jobs already lost.
“We require urgent financial support and relief in order for these businesses to recover and rebuild and provide livelihoods,” it said.
Policy certainty needed
Vinpro said that the wine industry is different from other alcohol industries due to its tourism destinations attracting thousands of local and international visitors to the various wine regions and generating significant revenue for the economy and because it is a unique asset to the country.
The wine industry has built and continuously maintains a strong brand reputation for South Africa on the global stage, where we export to 132 countries.
Because wine is a cyclical product, the government must engage effectively and timeously with the industry on liquor-related policies and legislation to ensure a more conducive trading environment, it said.
“We ask for a clear taxation methodology as agreed with Treasury for wine-related products and an annual excise adjustment of below CPIX as the excise rate is already above the target incidence rate for wine and brandy. A clear policy framework with regard to beneficiation and inclusive growth in terms of access to existing and new water resources is also non-negotiable,” it said.
Fourth wave and another ban
The Beer Association of South Africa (BASA) has also warned that the government could introduce another alcohol ban in South Africa should a fourth wave of Covid-19 infections hit the country over the December holiday period.
The association, which includes the Craft Brewers Association, Heineken South Africa and South African Breweries (SAB), is concerned that another ban over a critical period could further damage the industry and lead to job losses.
The group has written to Trade, Industry and Competition minister Ebrahim Patel requesting his urgent intervention at a Cabinet-level to ensure that “irrational alcohol bans are no longer imposed, especially over the festive season, which is a critical time for the local industry”.
The previous four bans saw the beer industry losing 161 days of trade since March last year, putting just over 240,000 jobs at risk, with a tax revenue loss of R34.2 billion and R10.2 billion lost in excise revenue.
“No government funding or relief has been provided to assist our sector throughout this crisis, which has resulted in many small businesses being forced to close their doors permanently, including 27 craft breweries,” BASA said.