Michael Fridjhon: Does anyone care about Cape wine?

By , 13 July 2022

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5

SA bulk wine exports are growing.

Since the end of isolation – pretty much 30 years ago – Cape wine has gone from being the pariah of international markets to an easy abuse victim. For years we thought that the extraordinary boom in our export volumes was evidence that wine drinkers everywhere loved our version of sunshine in a bottle. Now we know (or at least should know) that the reason we’re so popular is that, in wine terms at least, we’re just an easy pomp.

Consider the facts: in the three decades since international markets started opening up for us, our exports have increased almost twenty fold. Pretty much half of our national production is sold abroad, a vastly greater percentage than either France or Italy could claim. Compare that with 1992 when our official exports were around 2% of the total wine crop. It’s hard not to feel a sense of national pride at this achievement.

I’m afraid I’m going to have to return to my carefully chosen metaphor of the “easy pomp.” Unlike Farmer Brown’s famous chickens (which tasted so good because they ate so good), we sell so good because we price so good. When it comes to dropping our broeks, we are out of the starting blocks faster than Usain Bolt.

Very little of this is news to anyone who unpacks the numbers SAWIS dutifully shares on its website. Our bulk wine exports are growing and in 2021 represented around 63% of our total sales abroad. More than 30 years after Nelson Mandela walked out of the Victor Verster prison and our export markets began to open up, we are still predominantly a source of cheap quality wine. And who are our customers? Anyone who will pay pretty much the same now as they did thirty years ago once you adjust for inflation and currency devaluation.

SAWIS does its best to whitewash the figures – showing that producer prices (up to 2021) were fractionally ahead of the Producer Price Index. However, when it comes to exports there’s only one figure that counts and that’s the hard currency selling price per litre. In 2021, including the far more lucrative local market, our grape growers banked an average of £0,33 per litre – which is pretty much the same as they were earning three decades ago.

So, in short, no one loves us more than they did when the world “rediscovered” South Africa and we set out on the Rainbow cruise of a lifetime in the shadow of the Great Madiba. Meet the price, get the deal… and the price is the same old price. South Africa is no more of a brand today than it was when Nelson Mandela, stepping out of the Apartheid-era jail, obtained for us our get-out-of-jail pass.

What does that really tell us? In thirty years we’ve built no brand USP. There is nothing uniquely South African that the world is beating a path to our door to discover, to take home to justify traveling to one of the furthest (from first world international markets) wine regions of the world. Even our established new generation heroes are simply doing what wine geeks the world over are doing: rediscovering “old vines”, handling the fruit with the least visible intervention, talking a good talk.

If you were a buyer from British Columbia with an invitation to attend Cape Wine 2022, and a free ticket paid for by WOSA to travel for over 25 hours (in economy class) to come here in October, what would really make you say “thank you and yes” to the invitation? Here are some (not very convincing) possibilities: the spectacular and unique personality of our wines, the inescapable desirability of the Brand SA message, the appeal of our uniquely Cape cultivars?

Other than a nod of the head for Old Vine Chenin, and a whiff of curiosity around Pinotage, surely the answer is price? Just price, because we over-deliver at whatever price point is out there, because the Rand is weak, and we have a crop surplus of around 50%, which we simply must sell because we need the tanks for the next vintage.

The roughly 140m litres of Cape wine sold in bottle are a generous indication of the real size of our international market, the real measure of how much the world cares for our wine. The rest is just surplus disposal, which is pretty much what it was when the KWV “managed” the industry. And as a percentage of our total production that’s way less than 50% and much closer to 10%. The truth is that no one in Europe, America or Asia really needs to list Cape wine. That’s because their customers aren’t exactly scrumming at their doors to buy it, and that’s because there’s very little that we produce that “talks to them.”

What defines the South African-ness of South African wine? Our unique take on cabernet, our instantly identifiable sauvignon blanc? I don’t think so. The best that can be said is that we over-deliver on quality, for pretty much every variety and at every price point. That’s because our USP is price: we’ll go as low as you want us to – we have a tidal wave of stock behind us and no national marketing strategy other than discounting the price until a buyer nibbles.

  • Michael Fridjhon has over thirty-five years’ experience in the liquor industry. He is the founder of Winewizard.co.za and holds various positions including Visiting Professor of Wine Business at the University of Cape Town; founder and director of WineX – the largest consumer wine show in the Southern Hemisphere and chairman of The Trophy Wine Show.

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  • David K21 July 2022

    Not so sure about an “easy pomp”, but certainly a good shag for the price of a cheap meal. Now, where’s that bottle of pinotage 😉

  • Export18 July 2022

    It’s really simple
    All South African manufacturers wine or whatever are export befocked & will give their souls away to obtain export orders.

  • Ryan15 July 2022

    What’s wrong with a value-for-money positioning, which a combination of currency and quality makes possible? It’s one of the most successful retail positionings in any sector, if you can deliver on it. Perhaps the mistake is not communicating it enough, rather than too much?

  • Anzill Adams14 July 2022

    Great article Michael. As always, cutting through the BS and telling it as it is. The South African wine industry is not viable. The net farm income of grape producers are less than 2% per annum threatening the industry’s primary resource. We do a great job at producing winemakers and viticulturists who has no clue about the marketing and business development side of the industry as it is not part of their training. And we produce no sales people or marketers that can sell our wines at better price points. Hence the reason why we are at best mediocre globally despite having of the best terroir and producing really great wines. Whats the point of chasing Parker points or Veritas gold when none of these has ever lifted the industry as a whole…

    http://www.dataledger.co.za/wp-content/uploads/2022/04/WineLedger-Report-.pdf

  • Tim James13 July 2022

    This is a rather curious article, Michael, and I think you are too harsh in some of your assessments. Not, perhaps, about the drive to the bottom of SA’s bulk wine producers – following the tradition inaugurated and even required, by the quasi-statal KWV in the 20th century. But even there, it’s worth noticing that SA is not all that different in this regard from some other producers. I just found some selected statistics from Ciatti Global Wine and Grape Brokers, who are regarded as authoritative. These show prices for Californian and Argentinan wine on the international market much higher generally than SA’s, Chile’s not all that different for red wines (though white wines more), and Australia’s prices for reds remarkably lower than SA’s – though many of the white wines (discriminated by variety) are higher than SA’s.

    For an example of reds: Chilean cabernet sauvignon: 62-86 EUR/hl; SA: 65-77; Australia/N Zealand: 36-50. Chilean Merlot 65-133; SA 65-74; Australia/N Zealand 36-50. I don’t think you’ll find the bulk prices for France and Italy to look very splendid ether. It is certainly not only South Africa that is packing the bottom shelves of European supermarkets. Many other countries also have “a tidal wave of stock”. Will you tell your Australian friends that the low average prices they get internationally for their cab and shiraz is “the real measure of how much the world cares for [their] wine”?

    As regards the more interesting stuff, the sort of wine that surely would be bringing your putative British Columbian buyer to Cape Wine, I think you’re being unduly sour. That buyer would certainly not be coming to primarily source bulk wine – that is done elsewhere; they’d be coming for the pleasures of tasting what is regularly described as some of the more exciting wine in the world. I think, if you are willing to drag yourself down to Cape Town for the event, you’ll find a great many international buyers that have thought it worth their while to come too.

    Your dismissal of all “South African-ness” other than good value, is more than unfair. You vaguely mention chenin blanc, which, at its pretty substantial top end, is certainly distinctive and excellent – and much of it at no discount to the Loire’s, by the way. California is having something of a revival of high-end chenin at present, with the Cape as an acknowledged inspiration. Cape chenin is important. The top-level white blends based on chenin are also highly regarded everywhere, and recognised as a unique and valuable contribution to the world of fine wine. Frankly, aside from considerations of Argentinian malbec and New Zealand sauvignon blanc, it’s hard to think of any other southern hemisphere producer that has offered such unique wine-styles to the world. And that’s even leaving out pinotage.

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