SOUTH AFRICA: Distell to boost red production by 50%

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The South African wine and spirit group Distell has embarked on a R67m cellar expansion programme at Nederburg that will increase the company's total pressing capacity for red wines by over 50%, and whites by 20%.

The programme will also boost Distell's wine barrel maturation capacity by 25%. It forms part of a wider initiative to strengthen the infrastructure to meet a rising demand for the company's wines, flowing from the merger of Distillers' Corporation with Stellenbosch Farmers' Winery (SFW), André Steyn, director of corporate affairs said.

"In addition, it is only as a result of the merger that such a substantial investment is being made, since SFW, owner of the Nederburg brand, would not have had the financial resources for an undertaking of this magnitude," he added.

In a statement the company added: "As South Africa's single largest wine brand with a growing following across Europe and, more recently, in the US and Canada, Nederburg has been earmarked for very significant expansion.  However, Distell is also planning to step up wine production elsewhere within the company and is extending its network of wine suppliers.  These suppliers make up wines in their own cellars to the company's specifications."

The Nederburg cellar expansion programme is part of a move to take the brand into the big league as a global player with at the premium and super-premium end of the market.

"Export volumes of red wines grew 13% for the 12 months to June 2002 compared with the previous year, but Cabernet Sauvignon and Cabernet
Sauvignon-based blends have shown especially big increases - in some instances around 38%.  Sauvignon Blanc sales jumped 75% and those of Noble Late Harvest wines have been extremely robust.  All indications are that growth will be even stronger in the current year, underscoring the need to expand capacity," said Steyn.

"The new facilities are being established not only to grow production but, as importantly, to allow for greater flexibility of production runs, accommodating small volume, boutique, as well as more mainstream wines."

The project, already underway, is being carried out in two phases, with the first scheduled to come on stream in time for next year's harvest.  When completed in 2005, Nederburg will have more than doubled its production to 10,500 tons a year.

Companies: Distell

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