Michael Fridjhon delivers a frank assessment on the far-reaching impact of Covid-19 on the Cape wine industry, which has seen a ban on exports and alcohol sales. He also talks about defining moments in the development of the South African wine scene, and how pre-Covid, he never really had a ‘normal’ day.
This has been one of the toughest times for the South African wine industry in recent years. Can you give us a summary on the last few months and how the wine industry has been hit by the alcohol prohibition surrounding the pandemic?
The past few months – since the 26th March national lockdown – have been an extraordinarily difficult time for the Cape wine industry. No one had been expecting an outright ban on the sale of alcohol, so home stocks were low and retailers’ shelves were full, which made looting inevitable. Initially, the ban included a prohibition on the completion of the harvest – which would have meant hundreds of tons of grapes rotting on the vines. Happily, this decision was reversed within a few days and with minimal losses. Then, for the first month, during the Level 5 stage of the lockdown, the prohibition on liquor sales extended to exports. The long-term effects of this decision have been significant – losses, not only in terms of cash flow, but cancelled orders, shelf space allocations and disruption through the entire value chain.
Once exports were again permitted, the execution of overseas orders ran into congestion at Cape Town harbour – the result of incompetent management inadequately prepared for the backlog tsunami. This delayed already overdue deliveries and further compromised the reputation of the industry with its international customers. In short, even once exports began to flow, cash didn’t.
It was only on 1st June when the country arrived at Lockdown Level 3, a further month later, that domestic sales re-opened. For many producers this meant over nine weeks of no domestic income, all at a time when the vintage imposed cashflow pressures on the business. To make matters worse, all on- and off-consumption outlets had been closed for the same period, so no one was in a position to pay off debt which had been current at the start of lockdown, but which was by then seriously overdue. For the brief period in Level 3 when sales were permitted – before the 12th July announcement re-imposing the ban – trading conditions were quite restrictive. All liquor outlets – from grocers to wine merchants to online to cash-and-carry – were only allowed to supply customers from Monday to Thursday. For the wineries, this was not only an issue in terms of their cellar-door sales arrangements: distribution was hampered, with the main market 1,500 km from the production region. For most of June, there were severe out of stock situations. Then, just as everyone was catching up, and completing the order backlog, the government announced a new domestic liquor ban – the situation which still prevails today.
With no end in sight in terms of when trade might re-open, the position is desperate. Over 50% of the country’s wineries crush less than 100 tons of grapes, the equivalent of 7,000 cases. Many are much smaller. It’s estimated that most of these operations have an annual turnover of less than £1 million. They’re simply not geared to fund themselves for four to six months of no sales. As serious, given that their client base is mainly in the hospitality industry, they have probably lost whatever was owed to them at the time of the first lockdown. The restaurant industry has been decimated: it was prohibited from trading in lockdown Level 5 and Level 4. Now, without alcohol sales, and with enforced social distancing (no more than 50% occupancy), the survival of all but the corporatised outlets looks very bleak.
Long-term things don’t appear any better. Bulk stocks at the wholesale merchants represent more than a year’s sales: there will be very few grape buyers for the 2021 vintage. The grower side of the industry has been under pressure for some time – low prices, compounded by the great drought from between 2016 and 2019 – and this has led to attrition in their numbers and in the national vineyard. On average the industry has lost two growers and ten hectares of vineyard per week over the past 15 years. One year of minimal fruit buying, because of unsold inventory in producers’ cellars, would see the sector obliterated.
You’ve been writing about and working in the industry for over 40 years. What would you identify as a couple of the most pivotal moments for the industry, and have they led to change?
[One is] the arrival of Julius Laszlo and Desiderius Pongracz in the Cape in the 1970s, bringing international oenological and viticultural expertise. Their involvement fast-tracked the importation of new clonal material and hastened (for better and for worse) the use of small oak barrels.
[Another is] the release of Nelson Mandela and the end of isolation: both from an export perspective but also because of how this led the next generation of Cape winemakers to go abroad and work in foreign cellars, and thus to lose their provincialism. A year into the Mandela presidency I organised a wine Test Match against Australia. My intention was to shock the industry into realising how far behind it had fallen: the outcome produced a lot of resentment from the old guard, but the youngsters understood the importance of discovering their own brave new world.
At much the same time, I launched a programme to bring focus to the Cape’s Chenin Blanc viticultural heritage. This has enabled Chenin, and the Cape’s extensive Chenin vineyards, to become a real force in terms of country’s international image. It helped to spawn what is now known as the Old Vine Project, initiated by Rosa Kruger, with a properly documented record of all the old vines in the country. This in turn led to a certification scheme that adds value to the fruit and has played an invaluable role in encouraging growers to preserve these heritage vineyards. In fact, for wine buyers seeking the unique and defining expressions of Cape wine, the premium Chenins and other wines from certified heritage vineyards are probably the best placed to start. Volumes are small, all are hand-crafted, and every one represents an aesthetically focused creation from a passionate and dedicated winemaker and viticulturist.
[Another is] commitment to ethical trading and responsible farming: given South Africa’s history of Apartheid, it was obviously essential that the post-democracy industry needed to address ethical trading concerns. South Africa has a rigorous regulatory body responsible for certifying area of origin, vintage and varietal claims, etc. That same body has taken over Integrated Production of Wine certification covering responsible vineyard management, and also confirms ethical trading compliance. South Africa now produces more Fairtrade-certified wine than any other country.
Tell us a bit about your daily life in Johannesburg, under normal non-Covid times! What does a day in the life of Michael Fridjhon look like?
There is no single day in my life – at least in a pre-Covid era – which would be the same as any other day. I am involved in many different wine-related activities. Obviously, wine writing features large. I have run a weekly wine column for close to 45 years, initially for the Financial Mail, then for its sister paper, the Rand Daily Mail, which was reincarnated in the 1980s as Business Day. I also write a monthly column for WineMag, once a glossy but now an online publication, to which I contributed from its inception, probably 30 years ago. I produce several columns a year for Wine Business International and a fair number of liquor industry opinion and news pieces for the South African press. I also have a website (Wine Wizard) which serves as the only rating, ranking and reviewing publication for Cape wine where every score is arrived at through blind tasting. Obviously, I also write columns and newsletters for the site, and for a relatively newly launched Wine Club which uses the scores and ratings from the site to determine its offering.
I do quite a lot of additional wine and spirits judging, as chairman of both the Old Mutual Trophy Wine Show and also of the much newer Old Mutual Trophy Spirits Show. On an annual basis I judge, and serve as a rotating chairman, of the Six Nations Challenge, a competition hosted in Sydney and the only event of its kind where the major New World wines industries compete head-to-head across a range of classes. I still do a number of small panel tastings, as well as the occasional competition abroad.
In 2000, I took over the oldest consumer wine show in South Africa, rebranded it, and extended its reach to include a number of provincial capitals. It is run on a day-to-day basis by its own event management team, so it’s not all that demanding of my time. The Johannesburg event typically attracts 10,000 visitors, and the regional shows another 6,000 guests.
I’ve had an interest in a wine importing business for 40 years. I don’t manage it, but I have my office in the same premises, so I’m often involved in strategic planning for the business, in buying decisions and in maintaining contacts with the suppliers – most of whom run family rather than corporate operations, and many of whom I have known since the 1980s.
I am Visiting Professor of Wine Business at the University of Cape Town’s Graduate School of Business, teaching some of the modules and providing input in course planning. I was the special advisor to the Minister of Agriculture during the Mandela administration and I am still sometimes involved in activities around the broader industry. I used to do a lot of corporate consulting, but because of the potential for conflicts of interest as a writer this work is largely done for wine exporters (who involve me in assembling their blends), though I sit on the tasting panel of a supermarket group and I am responsible for putting together some of the house wine ranges. Naturally, I’m not involved in rating or writing about these wines. I occasionally get involved as the technical advisor when there are takeovers requiring my expertise, or independent specialist knowledge when a due diligence is being conducted.