Dreams of making a comfortable living off South Africa's fertile Cape winelands are souring for many grape growers forced by dipping exports and stagnant domestic sales to throw in the towel.
"For sale" signs dot the renowned Stellenbosch winemaking region with its vineyards nestled among picturesque mountains and a proud, 300-year history of viticulture.
Withering profits had prompted at least 30 Stellenbosch wine farmers to put their land on the market in recent months, says estate agent Pierre Germishuys. "Many simply cannot keep up. They say they cannot keep producing wine grapes at a loss."
Industry players say an unstable exchange rate, global over-supply, dropping prices and agricultural subsidies in rival producer countries have made it hard for South Africa to compete in the low-price wine category.
"The bubble has burst," says Erhard Roux, winemaker and manager of the farm Devon Hill — one of those for sale. "No South African wine farmer has ever seen such a thing — so many things going wrong at once."
With prices dropping internationally due to over-supply, local cooperatives, distillers and cellars unable to sell existing stock are paying farmers not to harvest because they have no storage space.
The price is less than a third of what the growers had expected to earn per tonne of grapes. "It is heart-wrenching to see those grapes being left to rot," says Roux.
Compounding the troubles
Other winemaking nations are also feeling the pinch, but the South African industry has compounded its own troubles by underestimating demand for premium quality brands and neglecting marketing to a dormant local market.
"The world has enough cheap wines, and with the market already well-owned by bulk producers like Australia and Chile, premium wine is the way to go," said Giuam de Korte, marketing manager for internet wine retailer Cybercellar. "[We should] market the premium wines. We have some of the best wines in the world, but if everybody keeps on drinking cheap South African plonk, they will never try the good, expensive stuff."
Chris du Toit, business manager for Rustenberg Wines in Stellenbosch, says well-branded producers of classy wines are flying high even as the rest are sinking to their knees.
Rustenberg Wines, which targets the British market with wines priced at £6 (about R86) a bottle and upwards, is growing at 20% year-on-year.
"The local industry jumped on the export bandwagon when the currency exchange rate was favourable. Now they are paying the price for not cultivating premium brands and for ignoring the domestic market," Du Toit says.
Lack of skills
Previously sheltered from global competition due to apartheid-era isolation, many local producers lacked the skills to run farms as enterprises, to market themselves properly and to plan long-term, he adds.
Wine exports from South Africa, the world's eighth-largest producer, fell by 4% last year — the first drop in 13 years.
"We believe this is a temporary blip," said a statement prepared for the media by bodies representing wine producers, marketers and merchants. "The wine industry is cyclical in nature, with ups and downs. There is nothing abnormal about this. [There is] no crisis."
They projected exports to grow 2,8% this year, assuming the local currency depreciated by 10%.
Meanwhile, South African wine drinkers stand to benefit from lower prices.
"Large cellars with too much wine will flood the local market with low-price deals, while the smaller cellars have to compete at reduced prices to maintain market share," says Chris Grobler, national liquor coordinator for retailer Pick 'n Pay.
Says South African Wine Council chief executive Johan van Rooyen: "Local consumers can buy the best wines in a long time for the best prices."
Yet, local wine consumption — estimated at a low average of seven litres per person per year — remains a concern.
"We need to market to the black, up-and-coming middle class more effectively," said De Korte. "We have a potential market of 30-million wine connoisseurs out there.
"One can only imagine what effect it would have if the black middle class starts enjoying a glass of wine with their meals instead of beer." — Sapa-AFP