Supply chain risks experienced by Stellenbosch wine producers

Abstract

The South African wine industry is a significant contributor to the South African economy. However the wine producers are facing financial and operational challenges as they operate and compete in a highly traded local and international wine market. These financial and operational challenges manifest as risks in their supply chain and could affect the future sustainability of their business. It against this backdrop that this study aimed to identify the supply chain risks experienced by the Stellenbosch wine producers, and how they manage and overcome these risks. The research was conducted at five wine producers located in each of five Stellenbosch wine producing areas. The producers were selected through a non-probability purposive sample with the assistance of a gatekeeper. The study is descriptive and exploratory with qualitative data collected through semi-structured interviews with ten participants from the five wine producers. The data was analysed using thematic analysis. The study found that the main risk factors centered around: the planning activities concerning the risks involved in matching demand and supply; agricultural activities including the drought and other external hazard risks; the wine making activities including in-process controls; financial risks including margin erosion due to inflationary costs not being matched by selling price increases; and human resource risks. This study recommends that wine producers use a formal risk appraisal process, implement a supplier development process, could make use of precision viticulture methods and improved pest control measures.