Beyond volume: What SA wine really needs is scalable brands
By Christian Eedes, 10 July 2018
It’s interesting to note that the Badenhorst Secateurs Chenin Blanc 2017, a wine reported to be made in volumes of up to 170 000 litres per year, was among the top performers, scoring 92 on the 100-point quality scale, in a recent World of Fine Wine tasting of Chenin Blanc reported on by our correspondent Tim James here. This is a wine which will cost you R85 a bottle from local retailer Wine Cellar or around ₤11 (the equivalent of R195 at the current exchange rate) in the UK. As Secateurs originator Adi Badenhorst once said to me, “the margins are poor but it helps with cash flow.” Moreover, it means potentially great Swartland vineyards stay in the ground a little while longer.
The bottom-line issue remains, though, that even the canny Badenhorst remains a price taker. In conditions of just about perfect competition, a producer is a price taker because other producers can enter the market easily and produce a wine that is indistinguishable from every other producer’s – let’s not forget that Chenin remains South Africa’s most ubiquitous grape variety with 17 593ha planted at the end of 2017, the equivalent of 18,5% of the national vineyard .
What Badenhorst has done to a certain extent is create a brand – the Secateurs packaging with pruning clippers imposed on striking yellow stripe is memorable – but how much more could he have achieved with serious investment? Of course, meaningful multinational outlay is generally going to be hard to come by as long as land expropriation without compensation is the debate of the day…
It would seem nothing is impossible for Mike Ratcliffe, however, who has got his hands on some sort of capital after doing a deal which saw family property Warwick in Stellenbosch sold to San Francisco investment firm Eileses Capital. He’s recently been circulating via social media the mission statement for his other business venture, namely Paarl property Vilafonté which reads as follows: “An uncompromising attitude towards quality defines Vilafonté. Our customers ultimately remain the sole custodians of our reputation. We judge ourselves against the international investment grade wine market, but here alone quality is not enough. The most demanding wine collectors seek pedigree, desirability and historical propensity to retain and accumulate value. Vilafonté will strive to consistently emulate these traits to compete in this demanding market.”
As opposed to Chenin Blanc or any other white variety, Ratcliffe has always opted for red wine, current releases being Seriously Old Dirt 2015 available locally at R260 a bottle, Vilafonté Series M 2015 at R600 a bottle and Vilafonté Series C 2015 which was priced at R1 200 but is already sold out – total production amounting to 4 000 cases according to Platter’s 2018. In addition, the two top-end wines are always first made available to members of a mailing list at preferential prices and older vintages are re-released periodically. Ratcliffe knows that if there’s one thing money can’t buy, then it’s mystique and he’s doing a good job of building that into the Vilafonté brand. Mystique goes towards desirability and desirability goes towards sales – and you don’t need that much critical endorsement when the cash is already in the bank. Other local producers might well take a leaf out of his book.