| The huge oversupply of wine worldwide has turned into a nightmare and an economic disaster for South Africa 's growers, reports fin24.co.za.
Wine companies are now offering farmers up to ZAR 900 per ton (US $1= ZAR 7.25) for not harvesting the contracted grapes next year. And many vineyards situated at the heart of South Africa 's wine industry are up for sale because the farmers have given up hope amid very low prices available.
Wine experts and estate agents say Stellenbosch is the worst-hit region. In this area alone, more than 50 wine- and wine grape farms are for sale.
Where farmers previously earned up to 7500 Rands a ton for red grapes, they now get as little as 1500, which makes economic survival impossible. The profitability is also much lower. It costs farmers R40,000 a year to prepare one hectare of soil. The yield per hectare for quality grapes is between 8 and 12 tons.
The poor annual wine intake of only seven liters a person in South Africa is another contributing factor to the farmers' distress. ( In India it is one hundredth of that! - editor )
Johan van Rooyen, CEO of the SA Wine Industry Council (SAWIC), said the high volumes of wine now had to be sold dirt cheap to make place for the next harvest. "Prices had to be cut drastically because of the grape oversupply," he said.
Emile Joubert, communications consultant for the wine industry, said international suppliers of winemaking equipment said that 'in their 30 years of dealings in SA, they've never seen such a catastrophe', wondering how farmers could survive in such conditions.
High-profile foreign buyers snap these farms up. But they are buying them for lifestyle purposes and not to farm grapes.
According to Van Rooyen, there are farmers who don't struggle. This is because they realised a long time ago that the salvation is in quality, not in volume. " South Africa must focus on quality wine. We just cannot compete abroad with the likes of Chile that sells a bottle of wine at R6 ( US $ 0.90) in Europe . Farmers need a mind shift. They need to focus on the production of unique quality wines'. There are growers who are unable to keep up with delivery because of the demand for quality wines, he says.
Joubert said that one of the causes of the poor wine sales was tourism boards which did not market the wine industry as one of the cornerstones of the South African experience. 'Our wine industry does not get enough support from this side. The market is there, but they're not seizing the potential,' he said
Full report on http://www.fin24.co.za |
