The 74-year old Simonsvlei wine company, situated on the R101 near Paarl, has applied for business rescue.
The company hopes that during the business rescue process it would find an investor, Simonsvlei chair Francois de Manielle told Netwerk24.
He said the business rescue situation is due to a combination of factors. These include the impact of the drought and resultant weaker harvests.
According to De Manielle no jobs are on the line currently, the business continues to operate normally and its wines are still available at retail outlets.
Creditors have apparently been notified of a meeting in this regard which will take place at the wine cellar on November 8, reports Netwerk24.
Simonsvlei was initially founded as a co-operative by a group of farmers after the Second World War. Its focus has been on "quality wines at affordable prices".
De Manielle told Fin24 that, because business rescue is a legal procedure, it would involve a certain way of doing it.
"Apart from that, it is business as usual. We are already looking at two investors who have shown interest," he said.
He added that it was not only the drought which ended up necessitating business rescue.
"Although the drought had an indirect impact, there were a combination of factors at play. However, I remain very positive about the eventual outcome," he said.
Sad to hear that once-great South African wine co-op Simonsvlei has gone into business rescue. A victim of industry in crisis? With SA wine exports down 100m litres for 2019 it appears to be just so.— Emile Joubert (@emilejoubert) November 1, 2019
Wine farmers have been struggling due to weak harvests - for the second year in a row.
In May Vinpro, which represents 3 500 SA wine producers, cellars and industry stakeholders, reported that the SA wine grape harvest for 2019 hit a record low, largely due to the preceding drought and fluctuating weather conditions during the season.
Vinpro pointed out that, although only 1.4% smaller than last year, the crop has shrunk for the second consecutive year and 2019 represents a record low since 2005 when 1 171 632 tonnes were harvested.
SA is the 8th biggest wine producer world-wide and produces about 4% of the world's wine. The wine industry contributes R36bn to SA's gross domestic product (GDP) and employs nearly 290 000 people, according to Vinpro.
Severe weather fluctuations during bud break and flowering, followed by cool windy conditions during set, contributed to less and uneven bunches and smaller berries.