A shake-up for the wine industry?

Monday, 4 October, 2004
WineNews Editorial Team
Strong rand and wine surplus could cause headaches - and hangovers.

In a press release sent out last week, Colin Collard, Chairman of the Wine of the Month Club stated his concern about the effects of the strong rand on an already over-stretched industry.

' ... overseas producers have been dumping as much of their wine in SA as possible, leading to a glut on the market - something that is going to lead to a lot of consolidation and a possible rash of bankruptcies as producers who relied on the rand's weakness start seeing their balance sheets hemorrhaging red ink.'

There are already signs of change within the industry, with several high profile mergers taking place in recent months - and rumours of talks in other boardrooms that may come to the surface soon. 'The market is heading for a strong correction,' Collard says. 'In addition, with the harvest season coming up - in March - we will also see many producers having to empty their tanks This will compound the local over supply, especially with regard to the reds.'

In spite of the fact that a new winery (still) opens on average every week in South Africa - a trend that has been evident for some time now - there is a 'massively wide range of labels' on the local market and worry about where all this new wine is going to find its market. 'Although we are now a champion wine exporter, with many of our producers winning important accolades overseas,' Collard adds, 'there is undoubtedly a glut of wine.'

But, if the strong rand and the wine surplus is bad news for wine producers, it is 'exceedingly good news for wine consumers.' With producers selling off stocks at rock bottom prices. Customers can expect to find bargains, particularly in quality wines for their collections.

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