Marthélize Tredoux: Picking apart price

November 22, 2017
by Marthelize Tredoux
in Opinion & Analysis
with 12 Comments
the. Cabernet Franc 2014

Aim high.

Let’s face it: it was inevitable that I would sit down and hurl my R0.02 at the latest wine industry windup. Two local winemakers (pick your own adjective here: creative/ambitious/cheeky/gutsy/ridiculous/insane) just released “the.” – a 2014 Cabernet Franc at a cool R5 000 a bottle. Oh and you can only purchase it in packs of three – so that’s essentially R15K a pop. “One to keep, one to drink and one for a friend” or something like that.

Oh my. What a kerfuffle. Outrage. Excitement. Disbelief. More outrage. Hints of delight. Visions of a utopian new world – ushered in overnight – where all South African wines reach their deserved price and our industry soars to greater heights than ever.

Ok, ok. I’m being dramatic.

But damn. So is that price tag.

Already the industry has chosen sides in the battle of opinion, with some declaring this the way forward to getting South African wines fetching longed for higher prices and the rest expressing various levels of indignation.

Before we delve, it is worth a quick glance at what typically contributes to the high prices of super-premium wines. For the uninitiated, this is not an exact science by any means. The laws of supply and demand are at play, mixed in with marketing and profits and clever maneuvering on the part of the players involved in putting the wine into the market.

Overall though, it’s fair to say a couple of key factors typically provide the support for astronomic wine prices: small production size (this feeds into exclusivity, which usually comes at a premium), old or otherwise unique vineyards (terroir typically mentioned here), production costs (e.g. hand picking and sorting/ use of new French oak etc.), pedigree and reputation (the most obvious but still best example to use here is Bordeaux First Growths or Burgundy Grand Crus).

Now, back to the phenomenon at hand.

I could not find a media release about “the.”, so I don’t have much to go on.Collaboration between Brian Smith (Elgin Ridge) and Niels Verburg (Luddite). Single vineyard in Bot Rivier. 900 bottles. That’s about all I know.

Oh and shoddy packaging. Don’t get me started on the design and execution there – or do, and we can discuss it in the comments.

At the launch, it was put up against a 2013 Chateau Mouton Rothschild and a 2013 Chateau Margaux and by most accounts it held up very well. Christian Eedes scored it 93 and Greg Sherwood MW waxed lyrical about it, plopping a grand score of 96 down. All good signs that at the very least, the content inside the bottle is worth taking seriously.

But R5 000? Well, R15 000 if you consider the obligatory 3-pack purchase option.

In an effort to understand the rationale behind the price – I compared some of our other high-priced and highly valued offerings. And yes – before someone pelts me with the argument that you cannot compare price and scores directly, I am aware. Thank you. What I’m doing here is trying to provide context within a sample subset of comparable wines to see if this new offering fits.
I started looking at the higher-priced offerings, like the 4G 67 Imizuzu (R5 600) and the De Toren Book XVII (R2 500). Both encompass most of the elements that typically underpin such ultra-premium pricing – limited production, exceptionally intensive and expensive production costs, well established demand for the exclusive product, pristine packaging, etc.

Then I dialed down the price point and looked at arguably some of our most highly valued – if not priced – wines. There’s the MR de Compostella 2015 (R1 150) – scored by Tim Atkin 96/100, Greg Sherwood 96/100 and Christian Eedes 94/100.

With the IWSC results just in, it is worth looking at three-time World Winemaker of the Year Abrie Beeslaar’s offerings. There’s the Kanonkop Black Label Pinotage. The current vintage (2016) sells for R1 750 per bottle, and the 2015 garnered a 96/100 from both Tim Atkin and Greg Sherwood. It sold for R1 590 at the time. The Kanonkop Paul Sauer received the same score, and is available at a modest R550 per bottle. Abrie’s own Beeslaar Pinotage 2015 was Tim Atkin’s ‘Overall Red Wine of the Year’ in his South Africa Special Report 2017, and that sells for R460 a bottle.

You can continue this analysis by looking at players like Sadie, Mullineux and the like. The pattern to me seems to be the availability of highly rated wines with an established track record at less than half the price.

I’ll be honest, I don’t see how this price tag stands up. I can’t figure out what it is based on other than sheer nerve. And the argument that this is what we need to raise South African wine prices across the board is flimsy at best and wishful thinking at worst. The issue around price is deeply rooted and traces all the way back to the rather unique agricultural economics of South African grape pricing, not to mention layer upon layer of additional contributing factors.

900 bottles at R5k a pop seems less silver bullet and more lead balloon.

And can someone please tell me which dizzy toddler stuck the labels on the boxes? R5 000 a bottle and they could not care less about sticking the labels on straight. Yeah. You can keep that.

  • Marthélize Tredoux is the co-owner and editor at Incogvino. By day, she helps SA wineries sell their wine in the USA. She won the Veritas Young Wine Writers Competition in 2013.

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12 Comments

  1. Johan GiliomeeDecember 7, 2017 at 6:32 pmReply

    Priceless!

  2. Jaco RetiefNovember 27, 2017 at 2:13 pmReply

    The main question in my mind is… new brand of wine, as a colab between successful winemakers from exceptional vineyard. But if I was an international wine collector looking to buy wine in that price range, I’ll try and verify it’s track record. Also WOM is very very strong in wine. What will you find if you google it? I’m curious to see if this experiment will work, well at least the wine won’t go to waste…. Just keep it in cool place.

  3. Ross SleetNovember 23, 2017 at 7:15 pmReply

    All is moot until the wine sells or not – and I suspect it will sell quickly. The market decides..

  4. jonathan snashallNovember 23, 2017 at 5:51 pmReply

    At least 40 American wines over R5k per bottle, off the top of my head Babich (NZ, started making wine in the 80s) release a Cab about 2 years ago for $399, top Penfolds around R15k, Catena Zapata Res (Arg) around R8k, Vinedo Chadwick (chile) around R3,5. So without going to Old World (for prices) way too much – for starters –
    cultural cringe going down here.

  5. JamesNovember 23, 2017 at 12:01 pmReply

    I think it’s great.

    Sure, the price is a bit ridiculous, but can almost be justified in terms of the wine’s scarcity and Niels’ reputation. Considering the vagaries of wine pricing, this is irrelevant anyway.

    What is relevant is that this just moves the needle. It further legitimizes the prices of the De Compostella’s and De Toren’s. Kanonkop’s Black Label suddenly doesn’t seem as expensive as it was last week. Luddite Shiraz strikes me as affordable all of a sudden (I see you Niels!). It’s easy to be all “Oh my God R5k a bottle!”, but there’s a bigger picture.

    In terms of the industry, as they say, “It’s not a one-day game”. This is not so much the giant leap you’re suggesting, as it is one small step. In the right direction, i believe.

  6. Greg Sherwood MWNovember 23, 2017 at 10:50 amReply

    Just wondering. Will be interesting to hear comments on this wine in 5 years time if it’s still R5000 a bottle and still scoring mid+ 90 scores… and many of the other wines mentioned are R4000 or R5000 per bottle as well. My feeling is we are living in a golden age of cheap fine wine in SA that can’t realistically last. Not saying I agree or disagree with such high pricing, but I can see it coming.

  7. Hennie CoetzeeNovember 23, 2017 at 9:54 amReply

    What seems the be the biggest gripe here around the price is the question of track record. I for one think Niels has a superb track record, he is one of the finest wine makers in the country and I happily buy and drink his wine.

    There’s no track record for the brand, fair enough, but perhaps there is a track record for the vineyard? A single vineyard from Botriver seems to be the most information we have. So perhaps this comes down to communication from the people involved?

    I certainly cannot afford to buy the wine (not sure if I fall in the demographic that this is aimed at anyway) – although I would love to taste it in a line up with something like the Raats Eden Cab Franc (not exactly a steal at R1600 a bottle, but a remarkable and damn fine wine) just to make up my own mind. Christian seemed lukewarm about it with a middle of the road 93.

    • KwispedoorNovember 23, 2017 at 12:29 pmReply

      Yes, Hennie, if this vineyard has a good to great track record, it would make sense to communicate it, not so?

  8. MarthelizeNovember 22, 2017 at 6:52 pmReply

    Quick correction here (sorry, Christian)
    The MR de Compostella was rated 98/100 by Greg Sherwood and 96/100 by Tim Atkin.

  9. Kevin RNovember 22, 2017 at 6:45 pmReply

    Can hear the bees buzzing in the hive but they haven’t come out yet

    • MarthelizeNovember 22, 2017 at 6:56 pmReply

      @Kevin R Haha! I’ll fetch my beekeeper suit….

  10. William LiwNovember 22, 2017 at 6:40 pmReply

    I wonder who is the target market for this wine. At that price tag, it is (roughly) in the price bracket as Cos d’Estournel, Chateau Angelus and Chateau Palmer, all of which have both reputation and track record to boast of . “The” has neither. Sadie, Mullineux, Raats and Paul Sauer, arguably have both and none come close to the same price tag. I do acknowledge the argument that “South African wines are undervalued and underpriced” but I am not sure I understand how producing (and selling) an expensive wine ups the image of South African wines.

    That said, produce a product expensive enough and market it well enough and people in the ultra premium segment will purchase it just for the sake of it. There is afterall a $100k water experience, even if rappers themselves think it is too expensive.
    https://youtu.be/rg3Mr6e1KMo?t=142

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