Liquor licences for virtual wineries

Tuesday, 1 September, 2009
Danie Cronje, Cluver Markotter
More and more new wine producers entering the wine industry do not own their own vineyards or wine cellars but conduct their businesses by buying in grapes, contracting a winemaker and leasing cellar space for the production and storage of their wine.
This model is often attractive for persons from previously disadvantaged communities who want to enter the wine industry but do not have the capital required to purchase a wine farm.

The "virtual winery" (see footnote) model referred to above is often the only way for them to gain access to the wine industry.

Often these new entrants to the wine industry are uncertain about liquor licence required to conduct such a business.

According to Danie Cronjé, the Director of Liquor Law at Cluver Markotter Incorporated, the Liquor Board in the Western Cape was introduced to this concept a few years ago when the company lodged a number of these applications for new entrants to the wine industry including Woman in Wine.

After the concept was explained to the Liquor Board at a hearing licences were granted to the businesses concerned.

In the case of such a virtual winery, the Liquor Board licences the administrative office where the administration relating to the manufacture and sale of wine takes place.

It is however important for the Applicant to make it clear in the application that grapes will be bought in and the wine manufactured and stored in cellar spaced leased from another producer.

Although the current Liquor Act in the Western Cape does not require the producer to obtain permission from the Liquor Board to manufacture its wine in the cellar of another producer the Western Cape Liquor Act (which is expected to come into effect later this year) requires such a producer to apply for permission from the Liquor Board to make its wine in the cellar of another.

According to Cronje this procedure is cumbersome and will take considerable time and would therefore not be practical as the permission will probably be granted once the particular harvest is over.

He confirms however that representations will be submitted to the Portfolio Committee currently amending the Western Cape Liquor Act to reconsider these provisions as they will place an undue administrative and financial burden on new entrants to the wine industry.

In view of the additional requirements for applications for new liquor licenses under the Western Cape Liquor Act, Cronjé recommends that any businesses which require liquor licenses lodge these applications sooner rather than later so that these may still be finalised according to the current Act.

Applications under the new Act are expected to cost more and take longer to be finalised due to the above-mentioned additional requirements.

Note by the Author:
"I am unsure whether anyone has used the description 'virtual winery' before. I began using it some time ago to describe a winery without vineyards and a cellar."

Fore more information contact Danie Cronje on (082) 772-3517 or email