Distell adopts strategy to combat wine grape glut [RSA]

Distell adopts strategy to combat wine grape glut
by WineNews Editorial Team

An innovative strategy of Australian origin to cope with oversupply of grapes and wine is being adopted by Distell, the company announced yesterday (10 October). Dubbed “vineyard mothballing”, the intention is to literally put vine production on hold, until the grape glut is over.

South Africa faces an oversupply of especially red varietals across all price points, though not nearly to the extent that Australia does.

Distell will hence forth follow a viticultural practice conceived by the Australians to keep vines alive but reduce maintenance costs to the minimum until supply and demand are better balanced.

Explains Ernst le Roux, who is head of grape and wine buying for Distell: “We plan to explore a number of routes to put vine production on hold for potential implementation ahead of the 2008 harvest. In the coming growing season we’ll be testing the concept to see if it is viable from an economic and viticultural point of view. Should it prove a proposition worth pursuing, we obviously won’t apply it to all red vineyards but only in those instances where the market calls for it, as the extent of oversupply varies according to varietal and quality. Despite the glut, there are some wine styles that are extremely popular and we have difficulty in meeting demand.”

“Some of the options we are considering include cutting vines right back to 30cm above the ground, giving them just enough water to keep going, spraying minimally against disease and keeping labour costs down by stopping weed control, fertilisation and foliage management. Another possibility is to prune very aggressively and then follow the same low-maintenance regime.

“Then, as soon as we anticipate a pick-up in demand, we return to normal viticultural practices and within a year, the vines are back to their previous levels of production.”

Le Roux said the low-maintenance approach to reduce operating costs would be supported by the introduction of cash crops, where appropriate, to ensure a steady stream of revenue for farmers involved.

“From international discussions, we are aware that in Australia and elsewhere, programmes are under way to mothball vineyards in selected areas in an effort to correct their oversupply. The Australians are projecting that the grape glut in their country could continue for another two to five years, according to Lawrie Stanford, the Australian Wine and Brandy Corporation’s information and analysis manager.

“He has been quoted as saying grape supply could outstrip demand until 2010 as export growth rates slow in the face of a continued oversupply and intensified competition from other players. While the situation in South Africa is not as severe, we believe in responding pro-actively to avoid a further inflated local oversupply.”

He said the impact of the various techniques employed to put production on hold would be monitored jointly by Distell and its supplier growers. “We want to find optimal measures to protect future supplies and, as importantly, to protect the farmers who are under enormous pressure to cope with rising supplies and declining prices.”

[ wine.co.za ]