KWV South Africa (KWV SA) is asserting its independence from its sister company KWV International and has entered into a strategic alliance, by signing a co-operation agreement with Stellenbosch Vineyards (SV).

In terms of the agreement KWV SA will start producing top quality red wines during the 2002 harvest from grapes supplied by SV. Previously KWV SA produced wine exclusively for marketing and distribution by KWV International.

In a joint statement the companies said the advantage of the project lies in the improved use of production facilities to attain beneficial economies of scale, and the subsequent decrease in unit costs.

Willem Bestbier, MD of KWV SA said his outfit was establishing itself as a "production centre of excellence" and it was vital to fulfil this vision by using their abilities and facilities to full advantage, together with those of selected partners and allies in the local wine industry.

To promote international competition, it was important to remove duplication and to focus on state-of-the-art technology, he said.

Hermann Böhmer, MD of SV said his company realised the need for and benefits of strategic alliances a long time ago. SV's approach is one of collaboration to the point of competition, he said.

"In this particular alliance, we aim to set an example to generate economies of scale, to make the South African wine industry more competitive against its international competition," he said.

He stated that SV was already involved in other alliances and would continue to do so, seeking mutually beneficial opportunities, irrespective of whether these occurred with local or international wine companies.