A South African wine industry spokesman has strongly refuted there was a "wine lake" in the Cape, as indicated in a story relating to beer's dismal performance on the domestic market.

South African Breweries Plc Chief Executive, Graham Mackay, said in a statement released in London that one of the reasons for his company's poor showing on the domestic market, was that wine was sold for as little as 20p a litre. Beer sales were down by 6% for the year to November.

Theo Pegel, Executive Director for VinPro, a wine producer organisation, said he strongly refuted claims there was a wine lake in South Africa. He claimed that a 7% surplus of wine, some 70 million litres for 1999, was negated to a certain extent by a 2%, or 20 million litre, shortage in the 2000 vintage.

"There is no question of a wine lake here - wine has shown a growth in sales over the past year of about 3,4% on the local market, while exports have increased by over 11%," he said.

"There is a lot of pressure caused by consumer spending in other areas - but we see this as a short-term problem."

Other analysts are more conservative about domestic sales, putting them at between 1,5%-2%.

"Domestic price levels have dropped quite dramatically, but these are due to market forces that are at work. There is a lot of pressure caused by consumer spending in other areas - but we see this as a short-term problem.

"We are also dealing with an agricultural product and not something like beer, which can be produced at the touch of a button. By the very nature of the product there will be surpluses or shortages.

"Consumer preferences and value for money must also be borne in mind. It is accepted that there is more "wine in a bag" available, but the quality of these products is also increasing. The wine industry has only been operating in a totally free market scenario for the past two years and these changes are also putting downward pressure on prices.

"Anyway, when you talk about a wine lake - you have to accept that a country such as Italy has an annual surplus which exceeds our entire production. While European wine farmers receive $1 billion in subsidies - the SA wine farmer does not receive any support to remove surplus products from the market," Pegel said.