South Africa wine: tipping point

The South African wine industry has reached a crucial moment, according to the chairman of Wines  of South Africa. Christian Davis got a tip off and was there

Michael Jordaan was speaking at the opening of Cape 2015 in Cape Town back in September. He said that, although wine was first made in the Western Cape in 1659 and Napoleon drank South African wine, the birth of the modern SA wine industry took place between 1990 and 1994 as the Apartheid era ended.

Since then South African winemakers had been ‘liberated’ to travel and learn from other winemakers. Also, growers had been allowed to bring in new plant material and new clones. The result had been an “explosion of new techniques and varietals”, according to Jordaan.

Therefore, he believes the South African wine industry is at a “tipping point”. From 200 wineries producing 22m litres in 1992, there were 600 wineries making 422.7m litres in 2014.

Wosa chief executive Siobhan Thompson describes South African wine as having a “nervy energy and being full of contradictions”. Nevertheless it was “resourceful, adaptable and inventive”.

“We have made major strides and, after 21 years of democracy, we are now in a state of adulthood,” pronounces Thompson.

Interestingly the Western Cape minister for economic opportunities, Alan Winde, in saying that the wine industry and tourism were “key components” of the South African economy, called on the industry to double its output.

Hennie Heymans, managing director of logistics company DHL SA, Cape 2015’s lead sponsor, told the opening seminar that “Africa is rising” but it faces challenges. He outlined them as:

- Underdeveloped infrastructure

- Customs inconsistencies: A lack of connectivity, not just electronically but, for example, fuel for aircraft waiting on the tarmac

-  Political instability

- And war, crime and corruption

He said logistics in Europe accounted for between 3%-7% of overall costs. In Africa it could be 42%. Heymans estimated that millions are lost in potential earnings due to restrictions, regulations and import costs.

Nevertheless, he said Africa was a huge untapped market and there were still “massive opportunities in sub-Saharan Africa”.

Jordaan made some interesting points in his introduction to Cape 2015. The former banker, now a venture capitalist, said: “Learning to look at what we have and how to make the best of it has taught us to become more cost-efficient while limiting our impact on the environment. Close examination of our role in the environment has heightened our awareness of the Cape’s exceptional biodiversity. It has driven us to protect our indigenous habitat, celebrate our flora and fauna, and entice wine tourists to discover some of our fascinating natural attributes.

“It has encouraged us to remember and cherish our old vineyards and to coax them to yield more of their memories. It has led us to investigate lesser-known varieties best suited to our growing conditions and to explore and experiment with new sites and winemaking styles.”

With a weak rand and rising costs, he said: “We are using our equipment and technology differently, and the result is increasing vitality, refreshment and elegance in our wines. Some of us have returned to the practices handed down by our forefathers. Others apply the latest available technology to optimise timing and resources. Yet others use a combination of both.

“We may not have extensive marketing budgets at our disposal but we tell our stories honestly, directly and courageously,” he added.

Regarding the political and economic backdrop to making wine, Jordaan said: “Our fractured socio-political past has challenged us to transform our industry, to become more inclusive and to pioneer ways that attest to fair working conditions and social sustainability.

“The Wine & Agricultural Ethical Trade Association (WIETA) is a voluntary body that actively promotes ethical trade in the wine industry value chain through training, technical assessment and audits to assess compliance with a code of good practice.

“Its stakeholders include producers, retailers, trade unions, NGOs and government itself, and the growing accreditation of producers shows a genuine commitment to improve the lives of wine farm workers, their families and communities. In this spirit, South Africa also produces more Fairtrade-certified wines than any other country in the world.”

Jordaan said Wosa had embarked on initiatives to empower historically dispossessed people through ownership in farms, brands and businesses and, through preferential procurement, to grow emergent commercial ventures and employment. It has bursaries, scholarships and training schemes to encourage more participants to work in the South African wine industry.

He said: “We are hard-working, industrious and positive. We believe in ourselves but have the humility to recognise that, after a little more than two decades in the international marketplace, there is still much we need to know.

Jordaan concluded: “We have found our voice. We are being called original, bold and daring. We are proud to be described as one of the most exciting wine-producing countries in the world, if not the most exciting of all. We are becoming increasingly confident in our experience, our knowledge of our vineyards, our wines and ourselves. But we also understand that with such praise comes the responsibility of meeting rising expectations.”

Accolade Wines’ lead winemaker, South Africa, Bruce Jack says: “In weak, high potential markets such as the US our main competition is often less obvious than our own internal issues like a lack of real funding for our generic marketing arm, WOSA.

“For South Africa in general our best export markets are the UK, Sweden, The Netherlands and Germany, mostly due to historic reasons and partly driven by tourism. We believe the US is close to opening up for our Accolade South African portfolio.

“From a grape-growing perspective, we have flexible but effective wine control systems, free from archaic and often market-unfriendly legislation, but with excellent traceability. This is a huge advantage. I call it ‘homeground advantage’,” says Jack.

Distell has announced a new global marketing campaign for its flagship wine brand Nederburg. SA’s major wine producer says Nederburg is one of its fastest-growing brands. Over the past year sales have increased by double digits, including in some of its most established markets such as Germany.

The first step in the multi-million rand campaign is a new look which will be unveiled on a staggered basis. Carina Gous, who heads the marketing team of Distell’s luxury brand portfolio, explains: “The first tier to receive the make-over is 56HUNDRED, a popular offering in the UK, where it is about to go on shelf.

“Other tiers will follow and in South Africa the new look will be evident from early 2016, when shoppers will find a different appearance to Baronne for example, the newly named The Winemasters that replaces Winemaster’s Reserve and subsequently, the other collections in the multi-tiered range.”

Ross Sleet, sales director of Cape Legends, Distell’s fine wine division, says: “The rand isn’t doing us any favours and the business with visas (government clampdown on possible child smuggling) is hurting us with tourism.

“In Africa, sweet reds started the conversation with wine. Now it is still part of the conversation with wine. Key African markets are Nigeria, Ghana, Democratic Republic of Congo, Kenya and Tanzania.

“The trend is towards bigger reds. Among hotel groups in Africa there is a realisation that you should not stock rubbish French or Italian wine when you can list value-for-money South African wines.”

KWV chief winemaker Johann Fourie says: “In the post-1994 ‘honeymoon’ we were planting all sorts of varieties. That is the past. We cannot have all the varieties in one region. We need to figure which grapes work in which region. Winemakers are more travelled now and we are not competing with each other. KWV has relationships with growers going back 50-60 years in all the major 12 growing regions.

“The challenge is the price point, moving the price to what is in the bottle. We need to be more bullish,” adds Fourie.

Former UK supermarket buyer and now a consultant to KWV Angela Mount adds: “South Africa needs to push regionality like other countries, such as New Zealand and Australia. We need to ‘break up’ the (Cape) winelands. There is still a tendency to lump South Africa all together. There is a lot of interest in Elgin, for example.”

De Toren managing director Albie Koch says: “We have to train, educate and upgrade to show that South Africa can make some high-end wines. We can show our wines without constraints. Our key markets are the UK, Germany, Switzerland and Belgium.”

Boutinot does not own any vineyards in South Africa but has a major SA brand in Cape Heights. Product manager Robin Naylor tells DI: “We’re not tied into anyone. We are like a roving camper van, looking for good sources of wine. Good things come and great things flow.”

Boutinot winemaker Marinda Kruger-Van Eck says: “In the past South Africa tried to be everything to everybody. Under the old co-operative system they just had everything and there would be a ‘flavour of the month’, such as Sauvignon Blanc.

“After 1995 it changed dramatically. We had been very isolated. Suddenly there was contact with international markets. South Africa has turned around. We do not want to be everything to everyone. We are finding our strengths, finding a sense of place, terroir. SA has such diversity,” says Kruger-Van Eck.

Jordan Estate owner Gary Jordan says: “Some days are longer than others. I think there is real interest in quality. The younger generation of sommeliers is looking for fruit, minerality, vibrancy and flavour. South Africa had a problem with the US but American tourists are now coming to South Africa.”

Oldenburg Vineyards’ proprietor Adrian Vanderspuy agrees with DHL’s Heymans that Africa is rising. Speaking at the launch of an art exhibition in London – called 1:54, featuring more than 100 leading African artists and sponsored by Oldenburg – he said: “I am an expat South African, having left there when I was three. I spent much of my life growing up in Australia.”

Having worked in financial services in Singapore and Hong Kong, he commissioned a survey of his grandmother’s estate where he was born.

“On a visit to the Cape, I tasted a bottle made by my neighbour – Thelema Cabernet Sauvignon – that was the lightbulb moment. I realised there was indeed a bright future for South African wines. I commissioned a study of Oldenburg’s terroir to assess its potential for making fine wines – I felt that if I was going to do it we had to aim for the top.

“In 2003, after getting the big thumbs-up from the various consultants, I bought the farm. Our first job was to completely replant to allow for optimal cultivar, rootstock and clone choices,” says Vanderspuy.

He concludes: “Africa is rising and so too are its wines and its art. With its very young demographic, this is a strong long-term trend,” he adds.

Accolade’s Jack adds: “We have a solid foundation of ‘world’ grape varieties, such as Sauvignon Blanc, Chardonnay, Shiraz, Merlot and Cabernet. Then we have strategic opportunities like Chenin Blanc and Pinotage from South Africa.

“Statistically, we are planting much of the same things as we have done for the past 10 years, but look below the big hectare plantings and you’ll see a raft of new and exciting varieties such as Touriga Franca, Barbera, Albarino, Rousanne.

“These will be found at the top end in ground-breaking bottlings within the next few years and bode well for the innovation and pioneering spirit very much alive in South Africa.”