Wine Investment in South Africa - Cape Wine Academy

the product and there was a lack of awareness of wine quality and vintage variation.
Only since the 90’s have attitudes been changing and the public become aware of
wine. SA winemakers need to look outward, to look at the best around the world.
But no trading facilities for wine
There is no trading platform for wine. People want young wine, ready to drink tonight.
Old wines are hard to sell and aren’t kept. There is no ‘in bond’ storage here. You are
not allowed to keep wine in bond more than one year which puts pressure on
businesses. Also there is a double VAT jeopardy whereby the buyer ( me ) pays VAT
then brokers on and has to add VAT in order to get the VAT I paid on the wine back,
as the purchaser is probably not VAT registered so I can’t reclaim it back from them.
This means VAT is paid twice and this makes the wine more expensive. You can add
R10-R30 per bottle costs on any wine brought in to SA before VAT.
And what hope is there for future wine investment
There are probably only 2000 potential investors in SA. The market is small. We sold
450 cases of wine last year ( 2010 ). Farr Vintners in the UK sold 150 times that much.
Also, allocations are a problem, established players have most of the market. Our
allocation of Château Ausone was three bottles, only four bottles of DRC were sent
for the whole SA market. Not many people invest in foreign wines either. Investment
needs to see returns of 10-15% to be worthwhile. That won’t happen with SA wines.
Supply is bigger than demand, there is no scarcity value, it shouldn’t be so easy to
buy SA icon wines, it is too easy.
Appendix G
Telephone interview with Norma Ratcliffe
Why is there currently little or no investment in SA wines
It may be partly because there has been disappointment. Not just with vintage
variation or poor quality wines in the past, but because we don’t store wines properly.
People don’t have wine storage at home so don’t buy wines to keep. We get people
asking us for older vintages, which we sometimes have, so they can drink the wine
immediately.
Some 6-7% of the market is fine wines – not very much, and Johannesburg is where
the market is.
But no trading facilities for wine
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