A three year drought that is considered once a millenium weather event has significant negative impact on the South African wine industry, particularly with that segment that is geared to the production of low-cost bulk wine which relies heavily on irrigation.
With water rights cut by 50% in the Western Cape, wine producers are having to choose which vineyards to save.
Quotas have already been triggered to cut the amount of water available to vineyards by as much as 80% according to a “Quartz Africa”. Taking into consideration that 60% of South Africa’s wine exports are in the bulk category, and there is concern in the industry that, if South Africa can’t meet the demands, others exporters such as South America and Australia will take over the market. Once the market for South African wine export is taken by the competitors, the winning it over will be a challenge, requiring time and investment to re-introduce the African wines.
A chronic drought that could leave South Africa’s Cape Town without water within weeks is hurting visitor numbers and damaging economy officials said.
With experts predicting Cape Town will run out of water in mid-April, residents have been told to limit usage to 50 liters per person per day. (A bath holds 80 liters of water).
Hotels have asked guests not to use baths and to limit showers to two minutes or less, while some restaurants are switching to disposable cups and ditching table linen.
Around 10 million tourists visited Cape Town last year, drawn by iconic sights like Table Mountain, its long sandy beaches and clutch of nearby wine farms.
Tourism accounted for an estimated 9 percent of South Africa’s economic output last year, or 412 billion rand ($35 billion).
Cape Town’s impending Day Zero is likely to have a severe knock-on effect across the entire national economy, widely affecting a number of sectors, and resulting in a possible credit rating downgrade for South Africa.
Speaking to the Citizens newspaper, economist Mike Schussler said that the water crisis is several times worse than load shedding, as not having access to water is relatively permanent compared to rolling blackouts.
This could lead to a number of businesses and industries looking at semigrating so that they can continue business operations in the country, he said.
Depending on how long the drought lasts, he believes that major industries such as IT, transport, agriculture as well as exports will all be significantly impacted as water scarcity limits businesses and causes Capetonians to look for greener pastures.