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Published:  23 July, 2008

A cost-competitiveness study commissioned by Wines of South Africa claims that South Africa is predominantly suited to the production of premium, super-premium and luxury wines'. The study, undertaken by wine business specialist James Herrick, compared South Africa's production costs to Australia's and France's across a range of prices and yield levels. The most efficient and low-cost viticulture will be one where man hours are reduced to a minium, and that is neither realistic nor desirable for South Africa,' said Su Birch, chief executive at Wines of South Africa. The study shows that, subsidies apart, low-cost wine comes from huge yields, low labour input, low cost of capital and large-scale processing facilities. Although some parts of the South African wine area may be appropriate for that style of mass production, the majority tends to follow the fragmented nature of poorer soils and climatic diversity,' she added. A follow-up study will be undertaken to quantify the actual distribution of the various wine business models in terms of farming cost and yields. At this stage, it appears that 70% of the national vineyard is suited to premium wine production and 30% is more appropriate for value wines.