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May 30, 2022 View:

Prohibition causes billions in economic losses to South African wine industry

On Sunday night, President Ramaphosa abruptly announced a ban on the alcohol trade in an effort to reduce social conflict over alcoholism and to prevent incidents such as alcohol poisoning or violent injuries from crowding public health resources, according to the South African Daily Business website on July 13. The South African industry expressed strong protest against this, and the Wine Producers Association, the Brewers Association, the Vintners Association and other organizations issued a joint statement warning that this is a disaster for the entire South African alcohol industry.

Image from: Wine Click

In late March, faced with the dire situation of the New Crown epidemic, the South African government issued a restriction order on industries other than essential services, and the wine industry was deemed not to be an essential service, bringing the entire industry to a complete standstill. But in fact, the wine industry is the second largest agricultural export item in South Africa. On June 1, after nearly two months, the ban on alcohol in South Africa was lifted, but soon, alcohol caused an increase in violence, and the ban on alcohol sales was reinforced again in order to reduce violence.

Vinpro, an organization of 2,500 South African wine producers, said at a conference on Wednesday that prohibition had cost the industry about 7 billion rand (about 200 million yuan) over a 14-week period. In particular, wine industry competitors such as Chile and New Zealand continued to keep trade open during South Africa"s ban, which led to South African wines losing some international influence and market share. And excess inventory became a major concern for the industry, with farmers unable to collect their 2021 grapes.

South Africa is the main export destination for European spirits in Africa, with European spirits exports to the South reaching €255 million in 2019. South Africa and the EU signed an economic cooperation agreement in 2016 that allows South Africa to export 110 million liters of wine per year duty-free to the EU region, and with the support of trade preferences, South Africa's annual net exports of alcoholic products to the EU amount to R5.7 billion. However, South Africa's continued implementation of Prohibition has caused significant harm to this mutually beneficial trade, and trade channels between the two sides have been completely closed.

Vinpro had previously communicated with the National Command Council, but they were unable to speak directly with the Council. Prohibition has brought massive new unemployment to South Africa. The South African alcohol industry and related supply chains employ a total of about one million people, and prohibition has led to massive illegal trade, resulting in a serious loss of tax revenue. The government's decision to ban alcohol will hit the economy hard, putting the livelihoods of hundreds of thousands of people and more at risk.

The alcohol industry has committed R150 million to the awareness campaign, which includes additional resources for the #NoExcuse campaign and investment in an awareness campaign on the dangers of binge drinking. The recovery plan has three focus areas: sustaining supply, reigniting domestic demand and enhancing skills development, and driving the transformation of the industry.