Wine Farmers Feel the Pinch as Revenue Drops

Article excerpt

WINE farmers are facing a significant drop in revenue, says a wine industry report.

The PricewaterhouseCoopers' (PwC) South African Wine Industry Insights Survey 2011 found that poor weather during the grape-growing season meant that the average yield was only 12.5 tons per hectare in 2010 against 14 tons per hectare in 2009. A cold, wet spring caused uneven budding while a dry and windy summer caused heat and wind damage to the vines.

The net revenue per producing hectare of wine grapes also fell in 2010 to a provisional R26 109.60 per hectare, compared to R28 095.65 in 2009.

Apart from weather, The PwC report also pointed to increases in labour and electricity costs.

PwC director Marco van Tonder said: "Labour costs this year increased by 24 percent, while electricity and water costs increased by 49 percent."

The Cape wine producers body, VinPro, welcomed the report as corresponding with its own research.

Paiter Botha, financial director at VinPro, said that since 2005 there had been a drastic drop in profitability of farms and a strong rand had hindered exports.

"For the past two years there have been poor harvests, and we have seen net farming income halved between 2009 and 2010 due to poor crop yields and rising costs in areas such as electricity. …