Wine Investment in South Africa - Cape Wine Academy

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Appendix D Interview with Dave Hughes Hon. CWM Why is there currently little or no investment in SA wines It is largely because of our history. Before the Second World War, we drank European wines. By the 1960’s, the strengthening of the Rand, from R2 to the GB Pound to R20 meant that those wines became expensive and there was a bit of a red wine boom of SA wines. But those wines, before, say, 1973 were poorly made and didn’t keep. This was partly because of poor corks and anyway, wine was bought and drunk straightaway. Also, the law prevented anyone selling wine without a licence and this restricted purchase and consumption. SA doesn’t really have a wine culture. Since the 80’s though, things have changed Wine drinking only began in the 60’s, and only in the last 20 years has wine been good enough to keep. People are more aware of storing wine better at home and some wineries began to store for the customer, such as the Bergkelder. But no trading facilities for wine There are no wine auctions, perhaps because of the years of poor wines, they are allowed to sell deceased estate wines and to bona fide collectors. It shows how bad laws were in preventing investment in domestic wine, the lifting of Prohibition was only in 1961. And what hope is there for future wine investment People will have to spend more on wine. More on imported foreign wines. Top wines have to develop a performance level thus creating icon wines but at the moment there is still no wine culture here. Appendix E Interview with Johann Krige Why is there currently little or no investment in SA wines One of the problems is credibility of SA wines as investment wines. Even Bordeaux has problems at the moment, the Chinese bailed out the Bordeaux system and saved en primeur from collapse. Also, South Africans don’t understand en primeur. And no trading facilities for wine 87
We were one of the first to offer en primeur. In 1987 we offered futures but we stopped in ’92. The problem was logistics. Some of the wine owners couldn’t be traced, some had moved away, some might have died, but we couldn’t contact them on the details we had. We were left with 4,000 cases taking up room in the cellars and wasting time and money in admin. We should have used négociants. Even today most of those people haven’t been in touch. What happened to the wine We still have some of it. The problem was we couldn’t sell it because it wasn’t ours, technically. We’ve got around that and sold most of it, but if the owners came back now we could still sort them out. And what hope is there for future wine investment We’re selling futures again. But this time through négociants. Once we deliver the wine to the négociants that’s the last we’ll have to do with it. We are winemakers, that is what we should be doing. We have three brokers selling the wine, the Black Label Pinotage. We are selling the ’06, ’07,’08,’10 and 2011 then we will sell from barrel. By then the wine will have proven itself and have quality credibility, so by 2012 we will sell in one tranche. Eventually we will sell the Paul Sauer as en primeur too. Within five years there will be several wineries selling en primeur. There are enough top SA wines now to justify it. And a big enough market It is a small market, but top wines still sell out. Several wineries could sell on a secondary market now. We could sell some wines several times over. We sell lots of fine wine to black South Africans – potentially the biggest market - and prominent black South Africans and think this will continue and increase. Appendix F Interview with Roland Peens Why is there currently little or no investment in SA wines There are several reasons for this. SA has no history of fine wines, it needs 50 or 60 years to build this up. SA has no generally accepted icon wines, accepted here or internationally. Apartheid made it difficult for international and domestic society to have access to SA wine and helped create attitudes towards SA wine which still linger. Wines were of poor quality and short lifespan, people had little confidence in 88
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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
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would avoid the need for the invest
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For the top châteaux, returns have
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‘bargain’ prices. This requires
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Ratcliffe, though, believes that,
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2e) buying through an investment co
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worldwide and hugely increased the
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6.1.2 Securing a release price High
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Other vintages should be considered
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Indices Level MOM YTD 1yr 5yr Liv-e
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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 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: CT has still got 2/3rds of the fore
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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