The challenges behind producing a bottle of wine: Supply chain risks

Abstract

Background: One-third of wine producers in South Africa are experiencing negative net farming revenues. The wine industry is close to the heart of South Africans and South Africa is known for its production of quality wine in the world. However, the wine-producing sector faces many difficulties that threaten its survival. Besides the possible impact of the land reform drive of the government, the industry is experiencing financial and operational pressures, which have been exacerbated by drought and high temperatures affecting the crops. These factors affect not only the wine producers but also the complete wine supply chain.

Objectives: This article provides insight into the supply chain risks of producing wine. The study was conducted among wine producers in the Stellenbosch region of the Western Cape province of South Africa.

Method: An exploratory, qualitative, case-study approach was adopted in this study. Data were collected through in-depth semi-structured interviews with 10 participants at five wine producers’ sites selected on a non-probability convenience sample basis. Thematic analysis was used to process the data.

Results: The most critical supply chain risks factors identified through this study centre around the sourcing of dry goods, agricultural activities, wine-making activities and financial risks. It also came to light that the wine farmers do not formally analyse their risks.

Conclusion: Wine producers can put in a greater effort to improve the relationship with suppliers of dry goods and they will more efficiently mitigate some risks if they actively analyse and manage their risks on an ongoing basis.