South African winegrowers are being forced out of business as prices drop due to oversupply, it was revealed this weekend.
Grape growers in the country have been hit by dropping prices due to world oversupply, as well as falling exports, slow domestic sales, unstable exchange rates and farm subsidies in rival wine-producing countries.
According to news agency AFP, For Sale signs are 'dotted' across Stellenbosch, South Africa's most well-known wine region.
'The bubble has burst,' Edouard Roux, at Devon Hill, one of the properties for sale, told the news agency. 'No South African wine farmer has seen such a thing – so many things going wrong at once.'
At least 30 estates have been put up for sale.
According to industry insiders, however, the crisis rests with wine producers aiming at the cheap, export end of the market.
'The local industry jumped on the export bandwagon when the currency exchange rate was favourable,' said Chris du Toit at Rustenberg wines. 'Now they are paying the price for not cultivating premium brands and ignoring the domestic market.'
Giuam de Korte, of online wine retailer Cybercellar, agreed that there was more profit in producing higher-end wines.
'The world has enough cheap wines,' he said. 'With the market well-owned by bulk producers like Australia and Chile, premium wine is the way to go. If everybody keeps on drinking cheap South African plonk, they will never try to the good, expensive stuff.'
Wine exports from South Africa dropped four percent last year – the first fall in 13 years.
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