Wine Investment in South Africa - Cape Wine Academy

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wines on release ( maybe some older vintages ) that sell for more than R1,300 a bottle ( excluding the recently released 2006 ‘The Bilton’ at R3,000 which only amounted to some 30 cases and is unlikely to be repeated ) and most for much less. The most expensive – available - wine is probably the ‘Rust en Vrede 1694’ at R1,200; about the same price as a 1996 Bordeaux Third Growth Château Palmer. Once demand is established trading could easily push up the price of top wines so that SA wines fill the void in the middle sector of the market, offering excellent quality at prices well below established blue chip wines. Pitching SA wines at the lowest end of the price range is not where ‘brand SA’ want to be. Many believe that this area will provide some of the greatest gains in the future ( Albany Portfolio Management, 2010 ). To understand the value of SA wines, consider the prices of current release icon wines, excluding top Burgundy, Rhone and First Growth Bordeaux, with some top SA wines, in Table 18 ( prices converted in April 2011 ). In most cases buying from the Estate will likely be cheaper ( refer to the winery price for Vega Sicilia in Chapter 4, 4.1, 1b ), for example Ken Forrester’s FMC Chenin Blanc is R260 at the winery but R350 retail locally ( May 2011 ). SA wines may seem expensive by SA standards, perhaps, but compared with international icon wines currently being traded quite a bargain; especially if one accepts a similar degree of quality. Andre van Rensberg remembers how sensational it appeared when his ‘V’ red wine broke through the R550 retail barrier, describing it as, ‘…a moonwalk…a small step for Vergelegen a giant leap for South African wine’ ( Van Rensberg, 2006 ). South African fine wines can fill the void of high quality at low prices and could make creating a portfolio of exceptional wines very price advantageous. Vergelegen Red# R390 Vega Sicilia (Spain ) R1,950 * Kanonkop Paul Sauer R280 Sassicaia (Italy ) R1,100 ** Meerlust Rubicon# R280 Harlan Cabernet (US ) R4,640 *** De Toren Fusion V R290 Screaming Eagle (US) R8,285 ¹ Warwick Trilogy# R290 Tignanello (Italy) R500** Sadie Columella# R660 Penfolds Grange ( Aus) R1,800² Waterford The Jem# R760 Tua Rita Redigaffi (Italy) R1,300** Kanonkop Black Lbl Pinotage # R1,100 Schafer Hillside Select (US) R1,610³ #Prices quoted from Cybercellar’s list * Four Walls Wine Co. UK ¹ Private Classified Co, US ** Arvi, Switzerland ² Lea & Sandeman, UK *** Suburban Wines US ³ Winezap.com, US Table 18. A comparison of current release prices of selected icon wines, April 2011. 71
For this reason, savvy investors might look at top end SA wines as providing a budget way into the market. Buying a case of each SA wine in Table 18 ( 8 cases in all ) would cost around R48,400 – much less if bought direct from the Estates. This is less than the cost of one case of 2009 Château Mouton-Rothschild bought in SA. SA wines could offer an exciting alternative to investors who currently buy the second wines of top estates or Third or Fourth Growth Bordeaux. An interesting portfolio might include a case of Sadie Columella rather than a case of 2008 Château Pontet Canet 5 th Growth Bordeaux, currently selling at exactly the same price ( Albany PM, 2011 ). Or more than three cases of Nederburg’s Edelkeur NLH 2004 for the same price as one case of Château Siduiraut 2001 Sauternes, or maybe nearly four cases of Boplaas’ Cape Vintage Reserve 2007 port for one case of Dow’s 1994. An example currently on SA shelves is the Moet & Chandon NV Champagne, retailing at more than five times the price of Krone Borealis and twice the price of Graham Beck’s Blanc de Blanc. A balanced portfolio of domestic wines will contain a selection of ‘blue chip’ wines ( those with a proven track record and pedigree, a degree of scarcity, ageing potential, established desirability, even waiting lists), a selection of speculative ‘low risk’ wines ( established, respected producers, competition success, ageing potential, rising stars ) and some ‘high risk’ wines ( often vintage dependent, maybe larger production, niche customers Blue Chip Kanonkop Paul Sauer Meerlust Rubicon Vergelegen Red De Toren Fusion V Warwick Trilogy Waterford the Jem Sadie Columella Sadie Palladius ( white ) Forrester FMC Chenin ( white ) Kanonkop Blk Lbl Pinotage Haskell Pillars Shiraz Kanonkop Cab Sauv Low Risk LeRiche Res Cab Sauv Boekenhoutskloof Cab Sauv Boekenhoutskloof Shiraz Vilafonte Series C Shiraz Newton Johnson Domaine PNoir Cape Point Isliedh ( white ) Nederburg Edelkeur ( white ) Bouchard Finlayson Galpin Pk PNoir K C Vin de Constance ( white ) Anwilka Red* Higher Risk DeTrafford Shiraz Spier Frans K Smit Kaapzicht Steytler Pinotage Haskell Aeon Shiraz Tokara Director’s Red Vergelegen (white ) Jordan Cobblers Hill Rustenberg John X Merriman JP Bredell Vintage port Hartenberg The Stork Shiraz Thelema The Mint Cab Sauv Graham Beck Cuvee Clive MCC Ernie Els Red Ataraxia Chardonnay ( white ) Table 19. A subjective list of investible SA wines of varying risk. 72
Page 1 and 2:
Wine Investment in South Africa Dav
Page 3 and 4:
Acknowledgements The following all
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Contents Acknowledgements………
Page 7 and 8:
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
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would avoid the need for the invest
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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 and 74: ecession. Table 16 below shows wine
Page 75 and 76: seeing négociants make huge profit
Page 77: wine market. De Toren’s will be m
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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