Editorial: Is R400 for a bottle of Chardonnay a lot or a little?
By Christian Eedes, 2 July 2024
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At a recent tasting of wines from Burgundian house Edouard Delaunay (distributed locally by Premier Cru Wines), the Septembre Bourgogne Chardonnay 2021 was shown, grapes sourced variously from Chablis, Côte de Beaunes and Mâconnais, total production 50 000 bottles, retail price R395 a bottle.
“Expensive or not?”, I wondered. First of all, quality was pretty smart. Some struck match reduction and citrus on the nose, the palate pure and racy, pretty much textbook white Burgundy. Not exactly thrilling but perfectly respectable. In one sense, therefore, not expensive given production costs, transport, storage fees, distributor rates and finally retail markup.
But in another sense, very expensive indeed when you consider that you can drink some exceptional local examples for much the same price, Paul Clüver Estate 2021 selling for R350 a bottle, for instance.
If you treat wine as a day-to-day pleasure rather than a luxury item reserved for special occasions, then anything costing north of R300 a bottle is prohibitive in principle. I’ve long advocated that South African fine wine is under-priced if we want the industry to remain economically sustainable but now that some of our wines are starting to fetch the prices they ought to in world terms, they’re increasingly out of reach for me! Want to drink pinnacle local Chardonnay? Restless River Ava Marie 2021 goes for R600 a bottle, Kershaw Clonal Selection Elgin 2020 for R655, and Capensis 2020 for R995…
The rise of the cult wine is also not helping matters. There’s increased demand for a select group of wines from private collectors, boutique retailers, hipster wine bars and top-end restaurants. Winemakers and distributors are, in turn, “allocating” their bottles – nobody wants to miss out on their share and this doesn’t exactly dampen prices. In a similar vein, high-end auctions are leading some to view wine as an investment vehicle rather than a source of enjoyment.
The thing is just when wine was starting to find a greater place in popular culture, price is ensuring that it remains as exclusive as ever. Whether wine prices are shooting up faster than inflation or whether the higher cost of living in general is making discretionary purchases on wine that much more difficult to justify, the danger is that South Africa remains a nation of beer drinkers.
What happens from here? Firstly, wine prices can’t and won’t keep going up for ever and ever. The case of Edouard Delaunay mentioned at the outset of this piece is revealing. Founded in 1893, the house had to be sold in the early 1990s and its reputation slowly fell. However, it was bought at the end of 2017 by the founder’s great-grandson, Laurent Delaunay, an oenologist and wine entrepreneur, with the aim of restoring it to its former glory. The house needs markets for its wine and here it is in South Africa offering competition to local producers and, as we all know, competition prompts industry participants to increase quality and/or decrease prices.
In any event, there are too many links in the supply chain. Costs need to come down at every stage of the price-setting process. Should distributors be thinking seriously about what they charge? Yes. Should retailers and restaurants be lowering the markups? Yes. Is rationalisation coming? You have to think it is.
Lastly, the consumer is obliged to do a little bit of research. There’re masses of data out there to sift through and there are masses of ways that this data is being broadcast – wine media isn’t dead, it’s just different to how it used to be. Should you be looking for Chardonnay, know that the average price of the Top 10 in the Prescient Report last year was R306 ranging from R110 for the Bellingham Homestead 2021 to R995 for the Delaire Graff Terraced Block 2022. God helps those who help themselves.
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Trevor Gray | 11 July 2024
Gone are the days of a easy drinking wine of R40.00
It follows that pricing follows the segmentation matrix. The recipe wines such as Nederburg Barrone and similar category leaders are nudging the R100 mark. Cycle deals are now less prevalent and likely 10% unlike in the past.
Some contributors to this article suggest R400 is a reasonable price for a world class wine. Of course if one does the conversion then possibly. HOWEVER the SA wine consuming public are not daily splurgers at this price point. The major local market has been conditioned by label gravitas so Rupert & Rothschild Classique is the preferred status tipple at R225 and is the bench mark IMHO. At the risk of being perceived as off topic on the article I would argue that there is such a small client base(left) that buys wine over R200 per bottle. Those that do will opt for a superior wine or one that is their favorite style do a perennial favorite.
As far as winemakers setting the price, I would be surprised if they seek to back a scenario where the wine has less likelihood of selling. Less sales means more space pressure and production obstacles if the sales or distributor does not move stock.
Costs at every part of winemaking are well recognized and documented. Distributors mark up and rebates mean the process is a further complication. This applies to both On- consumption and Off -consumption and one needs to query if the R400 price is in which channel exactly?
Erwin Lingenfelder | 7 July 2024
My answer is simple: R400 for a bottle of Chardonnay is a lot. my go-to from Paul Cluver is The Village Chardonnay at R150. Unlike the price behemoths it boxes way above its weight. We are building a culture of very expensive wines on a questionable platform. I am sick of all the wines exported, but not shining in foreign lands. This Is (South) Africa! Wine is not made for snobs and wannabee collectors, it is made to be enjoyed on a daily basis.
Simon | 2 July 2024
Wine has been viewed as an investment in 1st world producing (and non-producing) countries for a long time. The difference is that SA doesn’t (yet) have wines which are a match for the best Grand Cru Burgundy or 1st growth Bordeaux, in a great vintage. Also there isn’t yet quite the culture here for cellaring for decades and the reverence for what would be considered by most SA drinkers as ‘antiques’.
Isn’t there a fabled story about one of Robert Parker’s most avid readers, a noted wine collector with a cellar of several thousand bottles, who invited the celebrated wine critic to dinner, with a pre-prandial cellar viewing to boot. RP noticed many bottles gathering dust, some past their optimum drinking window and then, at dinner, amidst a formidable offering of gems from the collection, saw that his host hardly drunk a thing.
Remarking on this as discreetly as he could, his host ventured that he hardly touched wine…….he merely invested in it.
The wealthy tend to break away from the pack – and need constantly to be presented with exclusive items and experiences to challenge the depths of their spending power, massage their egos and make them feel like they are “au courant”. They also love a bargain and often keep a respectable ‘tradesmen’s wine’ in the house, in case non-VIPs or those deemed to have unrefined palates drop in for a braai.
One man’s ‘special occasion’ wine is another’s ‘kitchen supper’ tipple – the wine world is partly a reflection of society in its variety and huge price differentials, as well as its broad spectrum of views and tastes.
There are plenty of wine drinkers in SA with 1st world budgets for wine – after all, R400 is just €20, which is at the ‘kitchen supper’ end of things, if you are comfortably off (in 1st world terms).
One thing is certain, as you say: do your research, especially in a market such as SA, where there can be massive price discrepancies for the same commodities. Thank goodness that the internet has facilitated some transparency and consumer education in this regard.
Melvyn Minnaar | 2 July 2024
The astounding arrogance of so many winemakers who sit back and say “I think this beauty in the bottle which I created needs to be sold for R(fill in the hundreds) seems to me to be either super egotistical delusion or a sell-out of the culture they’ve embedded themselves in to make a living and career. It certainly blind-sights the reality of living in a country called South Africa with its thousands under the poverty line. I often wonder what the housekeeper thinks when she finds that empty bottle in the morning with the price tag of R400.
Jos | 2 July 2024
That’s capitalism… and if it makes you feel any better, the housekeeper probably has no idea that the bottle cost more than their daily wage.
Jen | 4 July 2024
You are incredibly, incredibly misinformed if you are of the opinion that winemakers set the wine retail prices
MM | 4 July 2024
Sounds a bit odd that winemakers don’t decide on pricing. But surely Caesar Capitalism consults with them.
Jen | 5 July 2024
Normally wine retail prices are set by the farm owners or whoever is in charge of sales and retail in the holding company that owns the wine farm – very seldom does a winemaker in South Africa set their own wine sales prices. Interestingly, your competitors also hold a big influence on your wine retail prices – which is why you would find brands such as Kleine Zalze, Robertson Wines, Durbanville Hills, Diemersdal, Beyerskloof etc all peddling their entry levels at the same price point, with a much more inflated ultra-premium range and one or two more expensive top-tier wines. Breaking down the actual cost of production is also quite informative, a 225L barrel goes for about 700-1000 Euro a piece, a bottle can price anything from R7 to R50 a bottle, labels can cost about R3-R5, Corks vs screwcaps etc… very few producers inflate their wine prices because of a winemaker’s ego. In any case, we are incredibly privileged in RSA to be able to purchase wines at an ‘entry level’ price that exhibit amazing quality. I can guarantee you that this is not the case in California – where you pay cheap for low quality wines and pay an absurd amount of money for a decent bottle of wine.