Michael Fridjhon: SA’s bulk wine business needs urgent attention

Cape Wine, the international trade event designed to seduce international buyers of South African wine by showing them the splendours of the Mother City and the country’s winelands, has come and gone. By all accounts it was a great success, with a better-than-expected turnout of important trade customers and a series of events-within-the-event that were remarkaby successful. Few people realise what goes into planning and executing an international show of this kind and the industry can rightly be proud of the achievement.

By an unhappy coincidence, the news of the year-on-year September export sales appeared pretty much at the same time. For those who look at numbers overall, they weren’t too bad. But for those given to unpacking the detail, they were anything but good news. Bulk wine sales are growing at a vastly faster rate than bottled wine in just about all our key markets. Even when bottled wine sales are increasing, the proportion between bottle and bulk is tilting towards bulk.

The 12-month figures (October 2021 to end September 2022) reveal some pretty depressing stats. Bulk now accounts for 69% of all Cape wine sold to the UK. For Germany the figure hovers at around 90%. For the USA it’s at about 75%, pretty much the same as Canada. In France – which only takes delivery of Cape wine because it is a central bottling point within the European Union – the number is a frightening 98%.

There are different ways of spinning this data but if self-deception doesn’t work for you, you’ll swiftly abandon the idea that the growth of our bulk business is the Cape wine industry’s contribution to reducing its carbon footprint. While this is of course factually correct, it’s not why it’s happening, and it doesn’t spell good news for Brand SA.

Wines which leave our shores as bulk immediately lose the integrity protection of our wine certification system. They simply become commodities, and no doubt many of these transactions are exactly that: a buyer somewhere needs well-priced sauvignon blanc or dry red and, given Rand weakness, finds that ours is the best possible deal at that price point.

More ominously however, he may decide that a Cape appellation beats a Bulgarian one, so he buys from both countries but omits to mention Bulgaria as one of the areas of origin on the packaged wine. While such a strategy obviously infringes basic labelling integrity requirements, there are ways of getting away with it.

There’s a further question for which the legal answer may not necessarily define what is happening: suppose a UK-based bottler buys bulk SA sauvignon purportedly from the 2021 vintage and offers it to a UK supermarket. He submits the sample and the buyer agrees it meets the spec – but a slightly larger amount is required. Do you honestly think he’s going to turn down the order, when it would be much easier to top it up to the requisite quantity with a small quantity of another variety, from a different country or a different vintage? As far as I know there’s no one reconciling the volumes sold in bulk for bottling abroad with the actual volumes bottled abroad.

You may argue that whatever happens overseas doesn’t much matter anyway. Our wine of origin legislation – the foundation upon which the modern Cape wine industry rests – is firstly and foremostly domestic. Only our local authorities are in a position to police it. Once the wine leaves South Africa it exits their jurisdiction.

There are at least two flaws to that argument: the first is that with pressure everywhere to reduce the carbon footprint of shipped commodities we need to be conscious of the damage to Brand SA resulting from the sleights of hand practised by middlemen, bottlers and brokers who have far less to lose than we have: we should put in place now the necessary arrangements to stop abuse. The second is that the easier it is for Cape wine to be sold cheaply, the harder it will be to raise the image of the wine industry as a whole, for growers to earn what they deserve for their labours.

We savour the achievements of the Sadies and the Alheits; we celebrate the international recognition enjoyed by the Old Vine Project and the ratings obtained by the wines whose fruit comes from those vineyards. Then we permit by far the greatest volume of our production to go into the wine markets of the world with a complete disregard for what happens once the bulk containers leave our shores. The way we disrespect our wines reminds me of what used to be said of the way the English aristos repaired their impoverished finances by marrying off their daughters to wealthy parvenues: “they bring them up as nuns, only to dispose of them as fillies.”

• 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.