Wine Investment in South Africa - Cape Wine Academy

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Wine Vintage Release Price Auction price* Growth Annual growth De Toren Fusion V 2000 R110 R416 278% 55% 2001 R135 R416 208% 41% 2002 R170 R400 135% 27% 2003 R205 R416 103% 20% Jordan Cobblers Hill 2001 R150 R316 110% 22% 2002 R165 R350 112% 22% 2003 R168 R225 34% 7% 2004 R168 R233 39% 8% Kanonkop Paul Sauer 1994** R58 R433 645% 43% 1995*** R69 R316 358% 30% 1998**** R100 R633 533% 79% 1999***** R130 R300 130% 14% Table 17. Comparison of release and Nederburg auction prices, showing growth over time. * at 5yrs age, ie the 2000 vintage appeared at auction in 2006, the 2001 in 2007. Kanonkop Paul Sauer was sold at **15years/***12 years/****8 years/*****9 years of age and annual growth has been adjusted accordingly. trade customers. Many ‘Nederburg auction’ wines will appear on retail shelves after the auction, after attracting retail mark-ups and VAT paid at auction. Auction wines come direct from the wineries, so provenance is guaranteed. An investor looking to sell wines onto the market would not be able to use the Nederburg auction, making the development of secondary trade outlets, such as auctions, vital to establishing a trading market. The Nederburg auction shows that there is a demand for aged SA wines and that SA wines grow in value over time. Section 3 Chapter 10 10.1 The way forward There are signs that the traditional en primeur system in France is wilting as producers tire of 67
seeing négociants make huge profits at their expense. Changes in US law has seen some Bordeaux Châteaux ship directly to purchasers in the US and négociant firm Millesima is among the first to cut out others in the chain. Top Bordeaux producers have their own agencies in place in major markets and this could make it easier for SA residents to purchase wines at attractive investment prices. This could in fact stimulate an interest in SA wine investment as consumers become more familiar and more confident in buying, holding and trading. Selling top Bordeaux in SA to other South Africans might show how simple it could be and how relatively low in risk. Getting South Africans to invest in European wine successfully is perhaps the best way of stimulating investment in SA wines. Investment wines are an exclusive category and SA wines must fight for their inclusion. Waiting for the world to discover SA excellence puts us alongside Australia, California and now Chile and New Zealand. SA winemakers need to be ambassadors for SA regions and styles and need to be cognisant of the best from around the world. As Roland Peens says, they need to ‘look outward’ and understand great wines, but then create greatness of their own and the more uniquely terroir based the better. Beyers Truter has identified, ‘SA’s best winemakers were much more in sync with their terroir than international commentators gave them credit for’ ( Truter, 2011 ). A shift in wine style, away from the fruity, soft tannin early drinkers seemingly so favoured by a large part of the wine drinking public may not be necessary, at least for the top wines. Most investment quality SA wines already possess the ability to age, with a structure and balance that suggests long life. What is required, perhaps, is to educate potential investors that certain wines improve over years and as with top Burgundy and Rhone may be less enjoyable in their youth. At the other extreme, there may be no advantage in creating ‘blockbuster’ wines big on alcohol and fruit aimed at appeasing influential foreign judges with little to distinguish them from other New World countries. It seems wrong just to ‘manufacture’ a wine in a style which will score well in competitions and achieve the magical 90+ score. ‘One of the ugliest facets of the modern wine world is the rise of the point chaserspeople who buy wine solely on the basis of Parker's ratings’ ( Goode, 2009). SA wines would appear to have all the requirements to become highly investible. They are achieving recognition abroad and because of years of isolation and a general dismissal of SA as capable of producing world class wines many winemakers have been ‘compelled to operate with more care, dedication and conviction than their international counterparts’ ( Van Rensburg, 2011 ). 68
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Wine Investment in South Africa Dav
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Acknowledgements The following all
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Contents Acknowledgements………
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List of Tables Table 1 Key investme
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1.2 Scope of Assignment Wine invest
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The barriers that seem to exist whi
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meet future market demand. The 1855
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after seller’s premium ) giving t
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Hence the growth of dozens of inves
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Table 5 above shows an even more im
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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 and 54: ‘It would be depressing indeed to
Page 55 and 56: some top producers do not enter the
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: ecession. Table 16 below shows wine
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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Wine Investment in South Africa - Cape Wine Academy

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