IT IS SUCH A BEAUTIFUL COUNTRY but things aren’t so heavenly in South Africa. It has just come out of the worst drought in living memory; there is immense political and economic uncertainty; and the South African wine industry is feeling the pinch.

Cape 2018, Wines of South Africa’s now triennial wine fest, was a mixed bag of messages. Recent rains had, at last, alleviated the drought but, longer term, it was made crystal clear that unless South Africa can make more from its wines, farmers will continue to grub up vines and plant more profitable crops.

That was the sombre message from Wosa’s non-executive chair at the opening. Carina Gous told a packed auditorium at the Cape Town conference centre that profitability was a “huge, huge, challenge” with many farmers giving up growing vines. A 2016 survey showed that 5,000ha (5% of South Africa’s total vineyards) were lost in the five years since 2010.

Showing a graph of all the leading wine-producing countries with South Africa at the very bottom in terms of profitability, Gous said the country needed to “head north east, or north”.

She said producers and brand owners need to concentrate on the on-trade and specialist retailers and improve quality and value, “otherwise we will not have a sustainable future”.

She added that exports had gone from 25% of total, peaked at 60% and was now 52% but she was concerned at the amount being shipped in bulk. She called on the industry to concentrate on packaged wines which were more profitable and would mean more jobs for locals.

The situation was not helped by political uncertainty, she said. Unemployment was 27%, but rose to 40% if you included people who had given up work. There was also inflation, VAT increases and the volatility of the rand.

KEY MESSAGES

So, the key messages from Cape 2018 were:

• The price of South African wine needs to rise otherwise it is not profitable for farmers to cultivate vines and producers to make wine;

• The 2019 is likely to be a good, but a short, vintage. The 2018 was 15% down – 40% down in some places;

• Vines are being grubbed up and there have been few new plantings, relatively speaking, and some of the red vines are getting old and need replacing. are affordable, people can buy them. For many speciality wine buyers, premium South Africa is able to offer their customers a genuinely great alternative to many more established wine regions. The key issue to the industry now is one of profitability and we have an industry goal to increase return on investment from where it is currently at 1%, to 5% by 2025 – 37% of the South African industry is loss-making. This goes deeper than just prices on shelf. It’s the prices growers can get for their grapes to ensure they continue farming, and also structural issues such as employment, wages and investment back into the vineyards.”

So what is SA’s USP? Thompson opines: “Our wines are a clear expression of our diversity – of the warm, passionate people and spectacular places that came together to create them. We are creative and not afraid to express where we come from and who we are now – and this is what is now showing in our wine. In terms of two focal points, of course Pinotage is proudly South African and we can now say we are leaders in Chenin Blanc.”

BULK VERSUS PACKAGED

In terms of bulk versus packaged, Thompson says: “International trade dictates, to an extent, the reality of bulk shipping and many international markets have large operators who ship wine in bulk. But this ends up on shelf as good quality branded and own-label South African wines. By 2025 the goal is to have 40% of our wines exported in bulk instead of the 60% we currently have. We are focusing on new markets in the US, Asia and Africa to increase sales of packaged wines.”

For another independent perspective, DI approached Kirsten Willis, Direct Wines’ buyer responsible for South African wines.

She says: “We try to work with our suppliers on a long-term basis to ensure continuity and guarantee of business year on year. It is always difficult when volumes are down, but again, the partnerships we have with producers has helped to ensure we secured the desired volumes. It meant we worked more as a team with producers rather than a traditional supplier-buyer relationship.

“Our consumers understand the value for money they have always received from South Africa and, even though prices are rising, it still proves one of the best value-for-money countries.”

Asked if she agrees with Atkin’s point of view, she replies: “I absolutely agree with his views on this. The atmosphere and camaraderie in the South African wine industry is fantastic. I believe this is the most exciting time to be involved in it. Over the past few years I have constantly seen improvements in wine styles and experimentation, producing better and better wines which are among the best in the world.”

What does Willis see as SA’s USP? “Variety,” she responds. “South Africa seems to be able to offer nearly every style of wine. The various climates, soils and the individuality of each winemaker (and their readiness to experiment) proves there are just no limits to what the country is able to produce.”

ROUND-UP AT CAPE 2018

From doing the rounds at Cape 2018, here are some of the comments from producers.

Kanonkop’s CEO Johann Kringle, exclaimed: “The drought is broken. We have got enough water for irrigation.”

He likened SA wines to BMW cars. The wines are perceived as ‘African’ and therefore associated by some with corruption, military coups etc, whereas BMW is seen as quality German engineering, but in Africa they are made in Pretoria.

Hartenberg managing director Kobus Potgieter confirms: “The South African wine industry needs to get prices up. Only 14% of all wine farms are consistently profitable. That is quite shocking. Another 47% are marginal. If we do not get prices up, especially for primary producers, farmers will pull up their vineyards. We have already seen a decline and in five years there will be a crisis as farmers will be unwilling to plant. Primary producers, who work with cooperatives, will pull out vines and grow citrus or whatever instead.”

The former Heinz executive says that selling and shipping in bulk does not help either profitability or job creation.

“We need to change the image of South African wines – focus on quality and packaged rather than bulk wine.”

Graham Beck Wines’ vision is to produce South Africa’s best Cap Classique – its sparkling wine style. The company produces 7.6m bottles of Cap Classique but is looking to double up to 15m bottles by 2023. Seventy per cent is consumed at home. The remaining 25% goes to 25 countries, the largest markets being Germany, Sweden, UK and African countries, most notably Angola and Nigeria.

While Cap Classique is made using traditional Champagne grapes, there is a move to include SA’s unique variety, Pinotage and/or Chenin Blanc. New legislation for Cap Classique is afoot.

Cellarmaster Pieter Ferreira, who has done 29 vintages at Beck’s, says: “I am very pro the Rainbow Nation story. So I am not against the idea. Pinotage is unique to SA but it is a temperamental grape variety. It gives a point of difference: ‘Diversity is in our nature.’ We need to embrace that.”

KWV chief winemaker Wim Truter told DI: “We are shifting to a lighter style, less oak. There’s massive focus on balance, making sure we have the right things at the right time – phenolic ripeness to get freshness, guiding acidity because once the freshness has gone, you can’t get it back.

“We have 60 growers on long-term contracts. So every farmer knows which varietal range and price point plots are vinified separately. I spend more time in the vineyards than in the wineries these days. South African wines always have colour and concentration.”

Truter acknowledged that leaf roll virus, which inhibits grapes achieving full ripeness and therefore affects productivity, remains a problem.

“You expect vines to last 20-25 years. If you have to grub them up after five years, you lose profit,” he states succinctly.

South Africa’s leading wine brand, Kumala, seems to have been quiet for a number of years although it enjoys good listings in UK multiple retailers. With Cape 2018, it came back with a splash of colour through it’s new Keep it Kolourful, campaign which goes across all markets, including South Africa.

It is described as the brand’s largest investment in 10 years, according to Accolade SA general manager James Reid.

Accolade Wines’ Kumala brand manager, Chris Buckwell, told DI: “Kumala has been growing 8% year on year and is the number one brand in the UK. It distributes across continental Europe and the Nordics.”

THE WILD BUNCH

While some of the major cooperatives consolidate or encourage their members to grub up vines, there is a proliferating number of young, enthusiastic boutique winemakers who extol being non-interventionist.

What was Zoo Biscuits but now Zoo Cru is probably the most well known. There are also Young Guns and the Old Vine Project.

This year’s Platter Guide, the bible Tons of Chenin does not count. As for Cinsault, Pinotage – seriously? They are not going to work.” Tam’s comments annoyed one of the participants, particularly as regards Pinotage. Tam backtracked a bit, claiming that Pinotage was just not world class as are South Africa’s Cabernets, and particularly Stellenbosch’s.

Tam challenged Stellenbosch producers to step up and take on the big guns of top Cabernets. “Opportunities are made,” he pronounced. “They do not just happen. Cabernet is a cash cow. It needs to walk and roam,” he said cryptically.

SA WINES - THE FUTURE

Wosa’s Thompson replied: “While we have our challenges in terms of becoming sustainable – be it profitability or transformation – we definitely are stepping into our own. We are confident enough now to own who we are and are creating world-class wines which we can truly be proud of.”

What is her message to those who recommend, specify or buy wine? “South Africa can deliver amazing wines in a huge variety of styles. We have our hooks in Chenin Blanc and Pinotage but we can make everything from cool-climate Sauvignon Blanc to world-class Chardonnay, to incredible white blends. On the reds you have classic Cabernets to crunchy, light Cinsaults, Mediterranean varieties, Pinot Noir, the list goes on.

“Our regions too, have strong identities, be it the heartlands of Stel-lenbosch, the reinvented Swartland, cool Elgin, Constantia, or the up-and-coming areas such as Breedekloof. We are full of stories, full of ways to talk to your customers – if ever there were wines with personality they are South African,” says Thompson.

Atkin concludes: “This is my seventh report about South African wine. It is by far the longest I have published, based on a lot of tasting, travelling and hard work.

“Why do I put in the long hours? The answer is because the wines, the places and especially the people, inspire me. There’s something happening in South Africa that is unique in the wine world. Call it energy, call it creativity, call it optimism, call it all three. But it’s apparent to anyone who visits the Cape. The good thing is that there is so much more to come.

“As Eben Sadie told me one lunchtime in the Swartland: ‘We are just warming up, we’re just pulling our spikes on. The real race hasn’t even begun. Just you watch what we can achieve.’”

Wosa’s Gous concluded her presentation at Cape 2018 using words from one of South Africa’s official languages, ‘hunnuwa, which means ‘good fortune, living in harmony, respecting community and protecting the environment’, and ‘Ubuntu’, which means ‘humanity, we are what we are’.

So, hunnuwa and ubuntu.