Wine Investment in South Africa - Cape Wine Academy

that they bought free of charge. Delivery anywhere on removal is also free. Excellent value
indeed, but the limiting factor is that only Distell wines, the owners of Bergkelder, are
permissible and despite the spate of recent awards for brands like Fleur de Cap and the
world class Nederberg dessert wines most do not figure on the international stage yet. For
domestic investors, though, this service provides a cheap way of building a portfolio of wines
which could become investible, especially the estate wines of Stellenzicht, Plaisir de Merle
and Uitkyk, but the risk factor is there. This is no doubt a longer term proposition than
buying first growth Bordeaux and investors would have to believe that not only can the wines
survive in good health until demand makes them desirable, but also that they will be sought
after in years to come and worth much more than was paid for them.
Whichever method is chosen, there remains in the eyes of the investor at home and abroad,
‘concerns over quality of storage’ ( Fridjhon, 2011 ) of wines held in South Africa.
8.2.6 No trading platform
Profit from investment depends upon being able to sell wine at the right time. This requires
access to potential buyers, as Jancis Robinson MW says, ‘obviously you need a way to
trade’ ( email, Jan 2011 ). In Europe there is a route to buyers via consumer magazines,
dozens of wine brokers, several auction houses, various websites and ultimately most wine
merchants who, given sufficient assurances about provenance and storage, would buy from
a walk-in customer. In South Africa it is not so simple.
There have been efforts to establish a secondary trading platform in SA, most, according to
Michael Fridjhon, ‘have failed’. Attempts to create investment funds have faltered ‘due to a
lack of investor support’ ( Wasserman, 2010 ). Presently there is, ‘no real transactional
environment’ ( Fridjhon, 2011 ) and attitudes towards such efforts have not been kind;
‘In local industry circles…there has been doubt, if not outright disbelief, that this
country could support an en primeur market’ ( Morris, 2008 ).
There are several reasons for this. Firstly, the number of potential investors is small,
perhaps as few as a couple of thousand according to Roland Peens. A comparison of sales
of retailer WineCellar in SA and Farr Vintners in the UK confirms this. In 2010 WineCellar
sold 450 cases of wine, Farr Vintners sold 67,500; some 150 times the amount. Ken
Forrester estimates that the total economically active wine-drinking market in South Africa
amounts to some 600,000 people, in the UK or Germany it could be 20 million.
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