Guiding a Wine Farm Through the Tough Times

Daneel Rossouw, functional head of agriculture relationship channels at Nedbank, spoke to Glenneis Kriel about the ways in which wine producers cushioned the impact of the COVID-19-related trade restrictions.

- By Glenneis Kriel

According to Vinpro’s ‘Impact of COVID-19 on the wine value-chain survey’ conducted in July 2021, 58% of the 549 respondents indicated that their businesses would have to make drastic changes to overcome the current challenges, while 22% said they probably wouldn’t survive. What do you think about this?

Rising input costs and competition are forcing farmers across the board to use economies of scale to survive financially. Small farming enterprises are in effect being bought out by larger businesses, which, in turn, are getting bigger and bigger.

COVID-19-related trade restrictions not only caused a loss of income, but the increased financial pressure accelerated the trend towards greater economies of scale.

We’re also seeing an increase in the number of foreign investors who want to get involved in the South African wine industry.

How did COVID-19 affect Nedbank’s winemaking clients?

Nedbank has a wide base of clients in the winemaking industry across South Africa’s various production regions. In general, we’ve not seen a great spike in debt levels since the arrival of the COVID-19 pandemic. Trade restrictions deferred sales by a few months; they didn’t destroy them [forever].

What were some of the differences you noticed between higher and lower-risk clients?