Editorial: Imported wine consumption set to rise as local prices continue to climb

By , 16 April 2024



The May 1994 issue of Wine magazine carried a report on a Pinotage category tasting in which Kanonkop 1990 was the top performing wine with a rating of 4 Stars. It also happened to be the most expensive at R27 a bottle, R27 in 1994 being equivalent in purchasing power to about R140 today when adjusted for inflation, or a cumulative price change of 400-plus percent. However, the current 2021 will set you back R550 a bottle, an increase approaching 2,000 percent over the three decades in question!

Several factors contribute to the tendency for wine prices to outpace inflation. Of course, production costs are fundamental and these include: Capital investment – the farm must be bought, planted, and continually cultivated; labour, both in vineyard and cellar; production equipment like presses, tanks and barrels; the time cost of the maturation process; electricity and fuel; packaging; and ancillary activities like sales, marketing and admin. Increases in all these are inevitably going to be passed on to the consumer.

Then there is the matter of speculation and investment. Wine has become an alternative asset class for some as the rise of the wine auction phenomenon shows, although whether participation is part of a genuine diversification strategy or merely a source of amusement is a moot point. In any event, speculation in the wine market is increasing prices beyond what might be justified by intrinsic value. If certain wines are selling for vastly more than their release price 10 or 20 years down the line, then why shouldn’t the producer aim to get a slice of the action from the outset?

Ultimately, however, what explains the ability of a producer like Kanonkop to not only match but comfortably beat inflation over the last three decades is brand prestige. There is no question that this farm has consistently produced wines that consistently meet or exceed consumer expectations. There has always been a very deliberate attempt to underscore heritage, a good example being that there have only three head winemakers since first bottling in 1973, and this with a view to signifying stability, reliability, and craftsmanship. There is a good understanding of the need to innovate and hence the launch of the deluxe Kanonkop Black Label Pinotage, hologram and all, in 2006 (this wine also used exclusivity to enhance desirability, at least initially when production was capped at 1,000 bottles). And then an astute understanding on the part of the brains trust of how marketing evokes the right sort of emotions – snoek braais and the firing of cannons go towards an inimitable visitor experience.

One element of the Kanonkop master plan that other producers have sort to emulate is prestige pricing – charge a premium and hope consumers will be convinced of the supposed cachet that this implies. There are now many examples of Pinotage, for instance, that aim to give Kanonkop some sort of competition. In this regard, a look at some of the other wineries included in the May 1994 Pinotage tasting report is revealing. Fairview 1991 sold for R11 a bottle while Primo 2020 from the same producer today costs you R550; Lanzerac 1989 then R12, the top-tier Pionier 2020 today R1,195; Simonsig 1991 then R15, Redhill 2020 today R570.

Whatever your feelings about Pinotage per se, there are a now several local producers that can rival Kanonkop for sheer quality but none of this comes cheaply.  Last year, Sadie’s Old Vine Series wines from the 2022 vintage started at R495 a bottle; Alheit Cartology 2022 goes for around R445 a bottle; Mullineux Old Vine White 2023 is R420, same as the Syrah 2021; and expect to pay around R350 a bottle for anything from Savage.

Let’s presume you strictly abide by the UK Chief Medical Officer’s recommendation that adults do not regularly consume more than 14 units of alcohol per week. A single bottle of wine with an abv of 13.5% constitutes 10 units so you allowance is therefore 1.4 bottles a week. If you’re drinking wine at R500 a bottle, then you need to earn R2 800 after tax per month to afford your wine habit…

One consequence of all of this that I predict is that we are going to see growing consumption of international wines. The best kit from importers like Great Domaines, Premier Cru Wines, Reciprocal and Wine Cellar are still going to be out of reach unless you’re a hedge fund manager, senior advocate or specialist surgeon but if you’re good for R500 a bottle, then there’s no need to stick to local stuff only.

David Clarke of Ex Animo, for instance, recently showed me a selection of wines from Spanish producer Envinate, including Palo Blanco 2021 from Tenerife, the largest of the Canary Islands. An ethereally beautiful wine, on offer for the entirely reasonable price of R500 a bottle…

It was also fascinating to taste Frankenstein Pinotage 2022 from Radford Dale (R499 a bottle) next to some of the Beaujolais that this operation’s Imports division brings in. Château de La Chaize Brouilly Les Deux Amis 2022 with its red cherry, driving acidity and fine tannins (R413 a bottle) was a pleasure.


3 comment(s)

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    Trevor Gray | 18 April 2024

    Having represented Concho y Toro locally when the Rand was R8 to the $ the Chilean wines namely Frontera R55 and Casillero del Diablo R85 on shelf were reasonably well received.
    The top end stuff like Terrunyo and Don Melchor were closer to R500 back in the day.
    Forward to today and by using Checkers import segment as the benchmark, there is some value to be had though the wines are now nudging the R100 as entry level.
    The suggestion that Joe or Joan Public will spend their rond on imports is a tough proposition. The value vs price narrative is a major obstacle! To state the obvious selling wine locally is not for the faint hearted especially without marketing budget.
    The author touched on input costs which are the elephant in every production cellar in the world. Here in Saffrica it is compounded by a weak exchange rate and brutal energy/fuel costs.
    The article correctly identifies the imbalance of consumers with meaningful disposable income who will “splash” out $ for something exotic to a certain degree. For this to turn into meaningful sales is questionable.
    If there is any silver lining it may be our BRICS membership IF trade opportunities are pursued. In the same breath we have seemingly patched the sinking AGOA pipeline at this time though the shadow of a Belligerent Demogogue looms larger on Nov 5. The USA market is growing and increased tourism will certainly boost our recognition despite a very strong competition from all the other wine producers who without exception are finding trade tough.
    The new world producers are actively encouraging grubbing up of vineyards and the old world has their own headwinds.
    Tough time for the wine industry world wide.
    Premuimization of SA wines helps as does a highly favorable exchange rate though disposable income is squeezed world wide. Our government seems he’ll bent on handicapping the industry whilst milking us dry. Expect NHS to further tap us out!
    Sorry for the doom and gloom but all the above suggest imports will remain a curiosity at best.

    Vernon | 16 April 2024

    There’s another side to this price coin. I particularly enjoy SA Syrah but it’s getting tricky to find good value now in the UK. So now I’m looking more to France. I buy mostly from The Wine Society who offer a fantastic selection of northern Rhones each year en primeur. I’ve just ordered “Syrah Les Candives, Yves Cuilleron 2022” £55 for 6 bottles in bond, i.e. approx £14 pb duty paid and “Saint-Joseph Château de Saint Cosme 2022” £105 for 6 IB.

    So, it’s not just SA wine imports being affected, exports too will have a harder time up against top quality international competition.

    Christina Wright | 16 April 2024

    A very interesting editorial, thank you!

    Not that I am NEAR being able to spend R500 a bottle for anything, but as I am studying the CWA Diploma at the moment, I wish I could.
    Thank you for always writing insightful editorials; I always look forward to reading them.

    Kind Regards,
    Christina Wright

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