Wine Investment in South Africa - Cape Wine Academy

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6,000+ wines in SA, some categories were statistically insignificant, for example of only 32 Chenin Blancs entered, 14 are now the ‘top’ in SA and of only 28 Cabernet Sauvignons amongst the many hundreds available, some 8 are also the ‘top’ in SA. Investors will need better guidance than that. 8.2.4 International recognition of SA fine wines Entry into the world market in the 1990’s saw many of the then 70+ co-operatives in SA release poor quality, cheap wine abroad. This was an opportunity to ‘dump wine’ ( Howard, 2011 Appendix C ) and international markets may still be affected by the low standard then coming out of SA. The SA wine trade had no cohesive view of how to sell wine abroad and little understanding of how to position fine wines ( Howard, 2011 Appendix C ). Only now are SA wines commanding more shelf space in key foreign markets. Yet in Sweden, where the Government monopoly prevents mass imports of cheap wine so that wine is judged only on quality / price ratio, SA has been the biggest imported wine producer for the last three years. With a blank canvass SA wines have obvious appeal. For investment purposes, especially by foreign investors, it is important for SA wines to establish themselves internationally, though some, such as Eben Sadie, have a slightly different take on this ( see below ). This is happening and each year more SA wines are appearing in fine wine lists amongst international publications and competitions. One of the most important is the International Wine and Spirit Competition. For more than forty years the IWSC has involved a panel of international judges and some 30 or more associate judges drawn from more than 15 countries to taste blind and award in varietal and national categories. South Africa has established itself as a regular medal winner and in 2009 received 10 Gold Best in Class medals as well as 107 Silver Best in Class medals. In 2010 only three Gold Best in Class medals were won, but SA did collect two International Trophies. Possibly the most important achievement so far has been Kanonkop’s three time success in winning the competition’s most prestigious trophy; the Pichon Lalande Red Wine Trophy, a feat unmatched by other New World countries and especially impressive as it is in the same class as First Growth Bordeaux and Grand Cru Burgundy. It was a similar story in the UK based Decanter Magazine World Wine Awards, where SA again won two International Trophies in 2010. Also in Europe, two South African wines were awarded Gold medals in the prestigious Concours Mondial Bruxelles in 2010. The 2011 results of the International Wine Challenge ( IWC ) held in London saw SA win 13 Gold Medals ( this was 3% of the ‘Golds’ awarded ) and 66 Silver Medals. There is an important issue here, though, 47
some top producers do not enter their wines in competitions and others don’t make enough to export to all the critics, publications or shows in key countries. It is not just about winning competitions. Inclusion in ‘ best of ’ lists and recommendations by publications such as Wine Spectator and Wine Enthusiast in the US, and UK magazines Decanter and Wine, as well as frequent mentions on websites such as Robert Parker’s and Jancis Robinsons’ will familiarise foreign buyers with many of the best SA wines. Emil den Dulk, owner of De Toren, recognised this when Fusion V was named the only SA wine to be rated in the top 100 wines 2010 in US magazine Wine Enthusiast, he believes it ‘raises the profile of all South African wines’ ( den Dulk, 2011 ). Regular appearances on restaurant lists will also help; Mike Ratcliffe speaks proudly of Warwick wines appearing on the lists of ‘four of the top ten restaurants in the world’. Many foreign buyers are already familiar with names such as Sadie, Meerlust, Warwick, Kanonkop, Glen Carlou, Thelema, Rustenberg, Rust en Vrede, Vergelegen and Tokara. Consider the travel website article on Viamichelin.co.uk which enthuses; ‘I discovered this exceptional wine-maker thanks to the venerable Parisian wine shop Les Caves Legrand on Rue de la Banque. I asked Kristeven M’Boungou, their knowledgeable and charming New World wine specialist, which South African wines I should try first. ‘Eben Sadie’s vintages!’ was her unequivocal answer’ ( Tresmontant, 2010 ). Eben Sadie’s wines are an interesting case in point. Firstly, Eben had never heard or read the quote above and though flattered, he is at odds with any attempt to appease critics or enter competitions. Despite his red blend Columella receiving 95 points from Parker in 2005, 2007 and 2008 he is completely unmoved by this. He has even withdrawn his wines from sale in the US. “I make wines to drink.. I don’t run after awards and I don’t take my wines around the world for approval” ( Sadie, 2011 Appendix H ). Sadie is suspicious of wine ratings and making wine to achieve ratings; “Selling on the tail of achievement is risky.” Sadie points out that wines achieving 95 points one year with a satisfactory vintage the following have little option but to be given 95 or 96 points the following. The saturation of wines now regularly receiving 90 points or more makes the assessment flawed. His point is made by the US website of ‘90pluswines.com’ which currently lists ( though many are past vintages of course ) more than 7,450 SA wines rated at 90 or more points; generous by any account. 48
Page 1 and 2:
Wine Investment in South Africa Dav
Page 3 and 4: Acknowledgements The following all
Page 5 and 6: Contents Acknowledgements………
Page 7 and 8: List of Tables Table 1 Key investme
Page 9 and 10: 1.2 Scope of Assignment Wine invest
Page 11 and 12: The barriers that seem to exist whi
Page 13 and 14: meet future market demand. The 1855
Page 15 and 16: after seller’s premium ) giving t
Page 17 and 18: Hence the growth of dozens of inves
Page 19 and 20: Table 5 above shows an even more im
Page 21 and 22: Thus 1 case brokered personally or
Page 23 and 24: would avoid the need for the invest
Page 25 and 26: For the top châteaux, returns have
Page 27 and 28: ‘bargain’ prices. This requires
Page 29 and 30: Ratcliffe, though, believes that,
Page 31 and 32: 2e) buying through an investment co
Page 33 and 34: worldwide and hugely increased the
Page 35 and 36: 6.1.2 Securing a release price High
Page 37 and 38: Other vintages should be considered
Page 39 and 40: Indices Level MOM YTD 1yr 5yr Liv-e
Page 41 and 42: may be legally more deserving than
Page 43 and 44: Even with the best intentions, wine
Page 45 and 46: Ullages (Level of Wine) For Bordeau
Page 47 and 48: Section 2 Chapter 7 7.1 South Afric
Page 49 and 50: people distrust wines of age and do
Page 51 and 52: 8.2.3 Domestic recognition of SA fi
Page 53: ‘It would be depressing indeed to
Page 57 and 58: found in numerous bottle shops - an
Page 59 and 60: cR50,000 in SA or an underground ce
Page 61 and 62: The need for investment from abroad
Page 63 and 64: Krige is selling previous vintages
Page 65 and 66: ‘South Africa may not have as muc
Page 67 and 68: found an even more serious lack of
Page 69 and 70: important to establish to the world
Page 71 and 72: cases the CWG wines achieved higher
Page 73 and 74: ecession. Table 16 below shows wine
Page 75 and 76: seeing négociants make huge profit
Page 77 and 78: wine market. De Toren’s will be m
Page 79 and 80: For this reason, savvy investors mi
Page 81 and 82: Section 4 Summary and conclusions T
Page 83 and 84: References 90pluswines. (2011) http
Page 85 and 86: Goode,J. (2009) http://www.wineanor
Page 87 and 88: Norman, R. MW (2011) Chenin Challen
Page 89 and 90: Van Rensburg, A. (2011) The Big 5 S
Page 91 and 92: Appendices Appendix A Interview wit
Page 93 and 94: CT has still got 2/3rds of the fore
Page 95 and 96: We were one of the first to offer e
Page 97 and 98: There is no way forward for SA wine
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