Wine Investment in South Africa - Cape Wine Academy

SA has proven itself almost uniquely capable of excellence in five diverse wine styles. No
other country, except perhaps Australia, can match SA’s capability of producing world class
wines in each of the following categories;
Port style wines
Muscat based dessert wines
Botrytised wines
MCC sparkling wines
Bordeaux blends
And this does not include Chenin Blanc whose Loire examples have proven its ageing ability
and where SA could establish a unique style. Nor does it include Cape Blends or Pinotage,
which might be a harder international sell ( as might Muscat based wines ). Each style has
candidates for international investment. Perhaps a way forward for SA to compete in the
international wine trading market is to promote the niche positioning of these styles rather
than contest the heavily populated Chardonnay / Cabernet / Merlot / Shiraz straight varietal
style.
10.2 Creating a market
Familiarity with iconic domestic wines, together with imported icon wines and a belief in their
inherent quality, longevity and desirability will inevitably mean that such wines will appear for
sale, months or years later, as owners seek to raise funds on their back. Individual sales,
avoiding licensing laws, through websites or magazines, via clubs, brokers or retailers is
already happening on a small scale. This will increase and secondary trading will expand.
Perhaps, despite the competition they provide to the small investor, hotel and restaurants
could be encouraged to buy through auction more often and to trade regularly to refresh
their wine lists, thus enlarging the market. This may be difficult to achieve as most are tied
to distribution contracts and many will have no desire to expand or improve a wine list with
auction bought wines where margins are tight ( Forrester, 2011 Appendix B ) or where there
is little demand for expensive wines. It is believed ‘The One & Only’ Hotel in Cape Town still
has 2/3rds of its international fine wines bought upon opening on its shelves two years later.
In difficult times, refreshing wine lists with exciting traded wines could be seen as an
effective marketing strategy.
Central to creating a market is distribution, especially abroad. There need to be links,
through agents, foreign industry commentators or joint investments ( as Bordeaux’s growing
presence in South America ). South Africa has little access to foreign distribution channels
( Forrester, 2011 Appendix B ) and this must be addressed to get SA wines amongst the fine
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