Wine Investment in South Africa - Cape Wine Academy

without sufficient buyers and sellers secondary trade houses will hesitate to offer sales
platforms.
Norma Ratcliffe at Warwick Estate does not need access to a secondary market to sell her
wines and had no need to offer wine futures. Whilst in charge, Ratcliffe could sell everything
from the winery and found that anyone hoping to invest in her wines was quite prepared to
buy direct. Older vintages were more popular among buyers who wanted a wine to drink
immediately and many would pay a premium to get them. Few had adequate storage to buy
and hold younger vintages, so wine for investment wasn’t considered. Either way, “people
are going direct to producers, they are not bothering with auctions” ( Ratcliffe, 2011
Appendix G ).
The Bergkelder Vinotèque in Stellenbosch was perhaps the first to take advantage of the
South African producer / consumer / investor link in 1984. They offered members prerelease
wines whilst in barrel and storage on purchase. Pre-release offers didn’t last long,
though and are no longer available. The problems were largely administrative as under the
Distell ownership their twelve brands and dozens of labels made offering en primeur
impractical ( Van Deventer, 2011 ).
Kanonkop Estate offered en primeur for the 1986 vintage, sold in barrel in 1987. The offer
was well received and most was immediately sold. The wine was stored at Kanonkop but
problems arose when some purchasers, who had paid at least a year previously, failed to
collect their allocation. Owner Johann Krige was frustrated with the logistical problems that
ensued. Some buyers were untraceable, some had moved away or abroad, others had died.
In the end, Krige was left with 4,000 cases of wine which was taking up room at the winery,
taking up time and money in administration and could not be sold as ownership was unclear.
Krige still has enough wine should the owners appear, but managed to sell the rest. It was a
harsh lesson which has convinced Krige that Brokers are essential, “we are winemakers,
that is what we should be doing” ( Krige, 2011 Appendix E). Recent success with their
limited release Black Label Pinotage, sold in two tranches, has led Kanonkop to re-establish
an en primeur offer, but this time through négociants.
‘The first allocation to our two négociants will be 600 bottles, with the next tranche of
400 bottles released a few months later once the market has determined the value of
the wines’ ( Krige, 2010 ).
Kanonkop’s responsibility will end when delivery is made to the négociants, as in Bordeaux,
and Krige forsees that this will further establish a secondary market for the wine;
‘With two négociants controlling the supply and demand they will be able to buy back
stock from willing sellers to sell on to parties willing to pay a higher price.’
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