South African Wine Farms Are Not Financially Viable
July 22, 2009
Apparently. Well according this article anyway.
Here are some highlights from the article/report by VinPro and WineTech:
Average production costs in the wine industry have risen by 24% over the past five years to R23 578/ha.
Over the same period wine producers’ income and net income have fallen by 6% and 52% respectively.
This is being driven by the high increases in the prices of fertiliser, pesticides, fuel and electricity.
The average net farm income in 2008 was, in all, R5 901/ha. For economically sustainable production, says the report, income needs to be almost three times this amount.
But - apparently there is some good news to behold:
There are signs of wine prices rising. Exports are on the increase, and a surplus of red wine has also been eliminated.
I’d welcome some industry related feedback on this article - perhaps some wine farm owners can share their insights into the viability of wine estates here in South Africa.
Furthermore perhaps this could be seen as a forum to discuss how to succeed in a financial climate such as the one described above - what are successful estates doing better and differently to stay afloat?
Posted in SA Wine Industry
July 23rd, 2009 at 9:20 am
I would contend that rising wine prices aren’t that great a deal for me.
July 24th, 2009 at 9:00 am
Indeed, the wine business is sadly not a license to print money. You have to work smart and build a brand incrementally if you want to make it in the long run. The other dynamic which you haven’t touched it the level of competition. Take a look at this brief analysis http://www.backsberg.co.za/blog/the-growth-of-private-wine-cellars-in-south-africa/