Load-shedding pours misery on South Africa’s wine industry

In the scenic valleys of the Western Cape, a crippling energy crisis is wreaking havoc on South Africa's wine industry. Rolling blackouts have left wineries struggling to meet production schedules, with crucial stages like irrigation and bottling severely impacted. The blackouts, lasting up to 12 hours a day, have stifled economic growth, and the wine industry's 300-year-old heritage is now at risk. Vineyards suffer, grapes spoil, and fermentation falters, threatening the quality and quantity of wine. As the government searches for solutions, small wineries, in particular, face enormous challenges in investing in alternative energy sources to weather this storm..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here..South Africa's Power Blackouts Are Crippling Its 300-Year Old Wine Industry.By Mpho Hlakudi and Khuleko Siwele.In a picturesque valley two hours' drive southeast of Cape Town, Berene Sauls is running way behind schedule. The crush from her latest harvest was delayed, bottling often slows to a standstill and she's been forced to repackage badly labeled batches of Pinot Noir and Chardonnay..The culprit? An energy crisis that's causing rolling blackouts across South Africa, impacting industries from mining to agriculture.."It's stressful," said Sauls, who founded Tesselaarsdal Wines in 2015 and has been in the wine industry for 22 years. "We have eight hours of work production and only four hours of power."Decades of underinvestment in dilapidated coal-fired power plants has left state utility Eskom Holdings SOC Ltd. struggling to keep the lights on. Unable to meet demand, it resorts to outages that can last as long as 12 hours a day, leaving schools, hospitals, restaurants and businesses relying on backup generators. The central bank estimates the blackouts, known locally as loadshedding, curbed economic growth by as much as 3.2 percentage points last year and forecasts just 0.4% growth this year.South Africa's more than 300-year-old wine industry has been badly hit, with loadshedding impacting all stages of production, from irrigation to bottling.If power cuts interrupt watering the vines can experience "partial stresses," which can reduce the size and number of fruit, according to Wanda Augustyn, the communications manager for Vinpro, an industry body."We expect measurable, but not a catastrophic, impact," from disrupted irrigation, she said. "At this stage it still has a big impact on producer profitability due to additional capital layout to realize the same harvest size and quality."Once harvested, grapes become overripe or damaged if refrigeration or climate control is disrupted, according to industry associations. The power cuts can jeopardize the timely crushing and pressing of grapes, while fluctuating temperatures can adversely effect fermentation processes, resulting in off-flavors.Loadshedding also halts bottling lines, leading to production delays and wastage of packaging materials. Saul's small winery cannot afford a generator for its packing shed, leaving her team in a frantic rush to prepare, label and package bottles before the next four-hour power cut. She's so far managed to fulfill large orders and avoid lost sales."We can't sell it if we don't have the means to package it," said Sauls, who has maintained production at about 10,500 bottles a year..Power is not only sporadic, it's also more expensive, with the National Energy Regulator of South Africa allowing Eskom to increase prices to help it maintain its ailing plants.."The costs of paying for electricity supply at inflated rates, as well as having to pay for diesel costs to run the two generators at our premises — this has vastly exceeded the budgeted amounts," said Elunda Basson, award winning cellar master at the renowned Steenberg Vineyards. The larger farm encompasses a spa, a hotel and an 18-hole golf course and was established in 1682 along the breathtaking Constantia Valley, 30 minutes outside of Cape Town. "It is not easy, but at least we can still produce at full capacity to supply local market and export."The winery is getting cost estimations for off-grid options including solar, inverters and batteries. "Consumers are also struggling," Basson said. "We have only increased wine prices by 7% this year. It's impossible to recover the entire cost from price increases."The wine industry contributed more than 55 billion rand ($3.1 billion) to the nation's gross domestic product last year, with exports worth 10 billion rand, according to industry group Wines of South Africa. The 2023 harvest is estimated at about 1.2 million tonnes, 14.2% smaller than last year, according to South African Wine Industry and Information Systems, an industry association. The drop is attributed to a combination of factors, including cold, wet weather, and the uprooting of vineyards due to disease. A lack of electricity in intensively irrigated areas negatively impacted crop sizes.The government of Western Cape province, which is home to the majority of South Africa's wine industry, was so concerned by the blackouts that it commissioned a report on the impact. Officials are concerned that irrigated wine grape production isn't sustainable if loadshedding gets worse than stage 6 — a level reached on numerous occasions this year at which Eskom cuts 6,000 megawatts from the country's power grid. The national government has announced a fund to help farmers invest in alternative energy sources.Support is critical, especially for smaller wineries, according to industry body South Africa Wine."For now, bigger cellars may handle this crisis best," Chief Executive Officer Rico Basson said. "Smaller farms and cellars may, however, experience a lot of challenges because it is just too costly to invest in generators."Read also:The Eskom roots of the Construction MafiaThe Western Cape's good news: Jobs, schools, safety, investment…Perfect partnership linking hiking trails in Cape Winelands is saving lives – SA Trails Network's Reghard Goussard© 2023 Bloomberg L.P.

Load-shedding pours misery on South Africa’s wine industry

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