FRUIT & BEVERAGES: KWV Sells Grape Juice Operation
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With its strategic focus on building alcoholic beverage brands, KWV Ltd has decided to sell its grape juice concentrate plant in Upington to neighbouring Orange River Wine Cellars (OWC) for R70 million. The transaction will see the grape juice concentrate business being transferred as a running concern to OWC on 1 September 2009.
Grape juice concentrate is a commodity product that relies on international market demand and local raw material supply. It was an important mechanism to remove surplus grapes from the wine industry during years of over supply, but more recently grape growers have opted increasingly for higher value options - selling their grapes for quality winemaking, raisins or distillation.
OWC has been a long term partner for KWV, and a sole supplier to the grape juice concentrate plant in Upington over the past few years. The decision to sell the grape juice concentrate plant to OWC was therefore a logical step in optimising this business. OWC as supplier and processor will be in the best position to manage the supply and demand for grape juice concentrate within the scope of its own business model.
According to KWV CEO, Thys Loubser, the decision to sell the plant was in the best interest of all stakeholders. "KWV's strategic focus is on brands and consumers, and although we have always been proud to include grape juice concentrate as a non-alcoholic product in our portfolio, we believe that OWC will be in a better position to continue servicing our current customers."
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