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Water crisis will have a significant impact on Cape wine industry


As the drought now afflicting most of the agricultural and many of the urban sites of the Western and Eastern Cape cuts ever deeper into the fabric of communities, all non-essential consumption is being assessed to determine its relative priority status.

Those who still enjoy access to any water and whose need is commercial – rather than for the sustenance of human life – are already finding themselves in some kind of a competitive pitch, either in the court of public opinion or for priority once the water tenders come trundling in.

In this, the wine industry finds itself in a better position than Cape Town’s restaurants, hairdressers and hotels – if only because, for the time being at least, it’s not facing a certain Day Zero. When the taps go dry in the Mother City, the vines won’t die (at least, not overnight) and there will be years worth of maturing stock to sustain wine producers (as opposed to grape growers) till the rains come, as one day they will.

Where the growers will face some mid- to long-term concerns will be when it comes to prioritising grape farming in the overall context of agriculture. The wine industry may be a major contributor to the economy of the Western Cape, but it is politically alienated. It’s going to have a tough time arguing for its water rights in the face of the demands of other consumers, whether those who seek potable water, those providing more essential foodstuffs, those who can produce evidence that litre for litre (to parody the late Clive Weil’s “trolley for trolley”) they generate more revenue, more employment, or a better fiscal contribution than other competitors for this resource.

Some regions and districts are better off than others: Elgin, around an hour’s drive from Cape Town, catches more precipitation than many of the coastal appellations and has adequate water supplies for fruit growing and wine-making – for the moment. On the other hand, this year the high-volume, irrigation-dependent growers along the banks of the Olifant’s River could see well over 50% of their potential crop lost – simply because their operations have been designed around optimising crop size (rather than quality) by massively hydrating their vines.

The Clanwilliam dam level is so low that grape growers will be allocated a mere 17% of their normal uptake. While for such large-scale farming operations the drought spells bad news, their crisis will have a relatively small impact on consumers of fine wines. The price of cask wine would go up, as would the price of those beverages which depend on this low-cost grape-based alcohol. The fruit juice industry would also have to look elsewhere for the concentrate with which they create their particular brand of sugary drink.

Vines, as viticulturists constantly remind us, are weeds. They may not thrive on neglect, but unlike roses, for example, they are hardy andrelatively drought-resistant. (In France it is illegal to irrigate vineyards producing appellation contrôlée wines). Vines will not necessarily produce their best fruit under arid conditions, but they will survive, and in some circumstances they might do very well. The best two Coastal Region vintage years in recent memory in South Africa were 2015 and 2017, while 2016 produced some very good wines. This trio of vintages (particularly the latter two) sit firmly in the era of constrained water supply. The 2018 crop will certainly be smaller – even in the areas which are not as dependent on irrigation as the Olifants River – but the smaller berry size could lead to more concentrated flavours. The concerns for now are the potential for excessive vine stress during the ripening season, as well as heat spikes going into the key weeks leading up to the vintage. The next month or two will provide empirical results.

The much more serious effect of the water shortage could be in its impact on wine producers – in other words, those who convert the fruit into wine. Wineries are food factories and consume an enormous amount of water. Many were built in an era when water conservation wasn’t front of mind. In the past couple of decades planning permission has been linked to waste water management, but even here this has generally meant containing the chemicals and waste removed in cleaning and flushing the tanks, barrels and winery buildings. In a situation which is not unlike the one presently confronting hairdressers and restaurateurs, winery owners may have to find a way of performing the processes which define their economic activity without the supplies of water that they have, until now, taken for granted. Recycling what they are able to obtain would certainly be a key component of whatever strategy they devise – but they would have to be more willing (than the Western Cape authorities, for example) to work on the assumption that water shortages are here to stay – at least for the foreseeable future.

Small-scale water recycling plants – of the kind which enable rural real estate developers to provide proper water-borne sewerage management (rather than the more old-fashioned septic tank treatments) cost around R900,000 and turn waste into potable water. This is not an investment lightly undertaken if you believe that by the 2019 vintage the dams will be full. However, if you need to plan the continued existence of a business whose real window of opportunity is a three-month period between the time the grapes come into your cellar, and the fermentation has been complete, you can’t disregard the importance of making the investment: it’s no different from installing generators, inverters and UPS back-ups in a time of load shedding.

The 2018 water crisis is going to have a significant impact on the Cape wine industry. Its primary impact – looking at the whole value chain from vineyards to the distribution of finished wine – will initially be a marginal decline in fine wine availability, a more significant decline (with a commensurate increase in price) in the vin ordinaire sector, with higher average costs per litre produced. These initial shortages may help the industry achieve its objective of a structural re-pricing exercise (though I wouldn’t hold my breath). The bigger question of whether the production sector will be able to adjust to an environment in which supplies of water are semi-permanently constrained will depend on the availability of financial resources, as well as the willingness to invest.

There is a final consideration, seemingly unimportant in the face of more pressing needs, which does need to factored into the industry’s long-term planning: its lobbyists constantly remind government that wine is a key driver of international tourism, which in turn makes an important contribution to the GDP of the Western Cape. If there are fewer tourists because of the long-term effects of the drought, less wine will be sold. Likewise, if the wine industry declines, so might the number of tourists. There will of course be a new equilibrium – but it will come with less employment and more hardship, spread through a population whose prospects are already looking pretty grim.

Source: dailymaverick

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