Wine News from South Africa

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WINE: The ailing South African wine industry

by Michael Fridjhon, 31 August 2012, 05:43 |

AHEAD of the 1970 UK elections, Private Eye ran a front-cover picture of the two opponents, adding its own speech bubble captions. Harold Wilson says to Ted Heath, “You’ve never had it so good”, and Heath, acknowledging his bachelor status, responds: “And I’ve never had it.”

This could be a message about South African wine: consumers have never had it so good, and this is partly because so many South Africans never drink wine at all. Per-capita consumption has been declining for years (whereas in the US, UK and Australia, for example, it has been increasing).

The Top Wine of Show at last year’s Five Nations Challenge in Sydney was the Nederburg Private Bin Eminence 2009. This was a multiple-award winning auction wine that was (and may still be) available at retail for $25. Though not cheap, it is a mere 10% of the price of Château d’Yquem, the world’s best known noble late harvest — and less than 1% of what you’d pay for the rarest current release equivalent from Germany.

There is no obvious qualitative reason for this pricing discrepancy. While each of these wines offers a different taste profile, all are true representatives of the wine-maker’s art. The Nederburg was the unanimous winner of the most coveted trophy at a show where entries (by invitation only) are generally the very best wines of the five key southern hemisphere producers. On drinking pleasure alone, the Nederburg was vastly underpriced.

This year’s laureate for the best wine on show is also from SA. While the name is under embargo until the results are announced, I do know it is also a multiple-award winner, and sells (in SA) for about $15 a bottle. When I shared this information with one of the judges, he was astonished and chagrined: astonished it could be so inexpensive, and chagrined that he couldn’t buy a bottle, even at twice the price (allowing for the costs of importation).

He was at a loss to understand South African wine pricing.

Neither of these show champions is the product of indefensible labour policies. The fruit from which they were produced was not distressed stock. If there is any subsidy in their pricing, it comes from the producer. Wineries simply cannot charge as much as their products are actually worth. Supply so far exceeds demand in the world of Cape wine that even the very top end of the market cannot achieve the kind of price spread that reflects a healthy high-end consumer-goods environment.

How, if ever, this is to be rectified is not easy to say. The industry cannot do this on its own — partly because it is too fragmented, partly because it lacks the resources, partly because of our country’s ambivalent attitude to alcohol.

There are no politicians to speak for the wine industry (even in the presence of overwhelming evidence that shows moderate wine consumption is good for health and that teetotallers die younger). Nuance is not a feature of the South African political scene.

We are watching the slow destruction of one of the oldest wine industries of the New World, the second-or third-largest source of employment in the Western Cape, and a significant contributor to our gross domestic product. SA’s wine producers have failed to produce someone to champion their cause, the African National Congress (ANC) pretends this is happening in another country, and the Democratic Alliance is happy to conspire with the ANC for fear of losing the very strong Western Cape prohibitionist vote. Like our other national crises — education, electricity, drinking water, health and telecommunications — the plight of the wine industry has a monetary as well as a profile cost. However, it is dramatically less expensive to repair. It requires political will and a coalition of forces committed to a positive outcome. And these are in even shorter supply than money.

This article first appeared in Business Day South Africa.