Wine Investment in South Africa - Cape Wine Academy

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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 89
There is no way forward for SA wines at auction. Investors, and buyers, are going direct to producers, they don’t bother with auctions. And what hope is there for future wine investment Maybe en primeur would be good for investment purposes. We don’t need it at Warwick, we can sell all we want from the cellar door or to regular buyers. We don’t need to look at futures Appendix H Telephone interview with Eben Sadie Why is there currently little or no investment in SA wines Lack of consistency. Bordeaux, the centre of the trade, has shown consistency over time, a very long time. Kanonkop Paul Sauer is the only SA wine that can show any consistency over time. It takes some 20 years to show consistency, and even then the world won’t take us seriously. It takes 20 years to make a great wine and three generations to erase bad opinions of SA wine. Even now the US doesn’t see SA as making any high end wine. Your wine is thought to be a future investment wine. Is this pleasing I don’t want people to buy my wine to sell. I want them to drink it. Your wines win lots of awards, including Columella getting 95 ‘Parker’ points three times I make wine to drink, we don’t run after awards. We don’t play the award game. Thank God SA winemakers don’t run after awards like California ! We’ve withdrawn our wines from sale in the US – we are not looking for prizes. Selling on the tail of achievement is risky. We don’t take our wines around the world looking for shows, we do five tastings in the countries of our agents and that’s it. Anyway, 95 points now is not enough to really get noticed, now you need 98 or 99 points. Appendix I Interview with Beyers Truter Does SA have any icon wines There are lots…I had a Tassenberg red recently, under cork, from 1969, and it was delightful, unbelievable. People are too scared to name SA icons, like the Kanonkop 90
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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
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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 and 94: CT has still got 2/3rds of the fore
Page 95: We were one of the first to offer e
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Wine Investment in South Africa - Cape Wine Academy

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