South Africa growers face up to oversupply

Published: 23 July, 2008

Growers in South Africa are being paid not to harvest grapes, while others are selling up their farms as severe oversupply hits the industry.

Producers are paying R900 (64) a ton to ensure that no grapes come their way from contracted growers next year. This year's harvest is earning R6,000 (400) a ton less for grapes for many growers compared to last year.

It's simply not enough to survive on. You can't earn a living that way,' said one top Stellenbosch winemaker, who did not want to be named. Some growers didn't sell anything this harvest, and a lot of my friends are selling up.'

Unlike some parts of the world, our growers have no government support,' said chief executive of the South African Wine Industry Council, Dr Johan van Rooven.

Perhaps we have had too many brands and too many wineries, and that needs to change. We can't compete against Chile and Australia at the lower end - we must accept that - and the weak rand has had an effect.'

Growers and some winery owners are exiting the industry, with a record numbers of farms up for sale. A major land agent, Remax, has 50 properties on its books in Stellenbosch alone. One 71 hectare site in Franschoek is available for just R32 million (2.3m). Chris Baker of Sotheby Realty in South Africa said people are struggling to make a living. They have grandiose ideas, but are really more interested in having the property as a lifestyle choice than a serious business proposition.'

Van Rooven said it was the natural cycle of the free market', and that in two years, everything will be right again'. But one winemaker replied: That's the million-dollar question, and I'm not so sure everything will be fine'.

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