Michael Fridjhon: What makes SA wine different and why should the world buy it?
By Michael Fridjhon, 17 August 2022
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As the year stumbles towards the first Cape Wine show since the pandemic, I’m beginning to wonder whether we – and by that, I mean those people who think about how the industry markets itself to the world – have not fallen into the convenient trap of defining our USP in terms of our most visible high-profile players. In short, have we defaulted to the idea that what the Cape brings the world is rockstar winemakers working with (mainly) old vine chenin?
Before there was a convincing case for this (very minor) component of the industry we were out there chanting about biodiversity. (I see that Australia has now hijacked this marketing message, desperate for something to sell to the West now that China has stopped buying the Antipodean version of sunshine-in-a-bottle and left them with the mother of all hangovers.) Even with the most diverse of the world’s plant kingdoms on our doorstep, we couldn’t make that strap-line sell much premium wine – but perhaps we were ahead of the zeitgeist.
Happily for those who had nailed our colours to the biodiversity mast, the case for old vines and craft producers presented itself so compellingly that they could quietly drop the “biodiversity is in our nature” pitch and leap onto the OVP bandwagon. So now – even though this message has never been formally adopted (as far as I know), the story which appears most prominently about Cape wine in the world press comes with gnarled old vineyards set in the bleak and water-poor landscape of the Swartland.
It’s probable that, like so much of how the industry goes about its business, we haven’t arrived here as a result of any conscious intention. The story had a natural newsworthiness to it and – to use the word with which I began this discussion – we simply defaulted to it.
To be fair, it’s done us sterling service. There is more editorial about the Cape now in the international wine media than at any time since the Mandela presidency. The UK in particular has recycled more than its fair share of South Africa as this extraordinary old-vine-and-craft-winemaker amalgam. It’s reached a receptive audience. London is home to the greatest concentration per square kilometre of high-end wine buyers in the world. Their addiction to vinous rarities cannot be satisfied even by priority access to the almost boundless combination of growers and sites which defines modern Burgundy. They desperately needed a Plan B and the Cape landed up in the right place at the right time.
It now needs to remain there – despite growing rivalry from Spain and Chile, the former with significantly more ancient vineyard than we can offer, the latter with a growing number of craft winemakers.
But is this enough – even assuming we can stay perched on top of this particular pyramid (the one defined by affordable single site rarities marketed by talented and theatrical producers for whom English is not an alien language)? And even if this turns out to be possible, do we wish to let this default position land up as the final resting place of the Cape wine message? Is this how we wish to be defined – the Old Vine One Trick Pony?
The answer has to be a resounding “no”. It’s a valuable attribute, an attention-grabbing marketing slogan, perhaps even a flagpole to fly a banner, but it should be no more than a single leg supporting a much broader edifice. What we need is a vision of ourselves which can accommodate a more complete story, one which can communicate vastly more about our quality wines. That is, if we wish to avoid their being condemned to the discount shelves of the international supermarket trade.
The sad and bitter truth is that three decades after the Cape wine industry emerged from isolation there are only two messages that define us to our international customers. The one tells of the cheap-and-cheerful bulk we have on tap for whoever is ready to pay a low enough price for it; the other praises our single site rarities which occupy a place at the higher end of the price spectrum but are not always available. The wealth of high quality finely made wine in-between remains invisible. I’m afraid we have not been served well by those whose job it is to market Cape wine.
- 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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M | 23 August 2022
When looking at the premium market, what is wrong with having the same quality for a better price? that seems like an excellent sales angle to me.. I never studied economics but that seems like a strategy from a 101 course.
SA has the advantage of considerably lower production costs than Europe and everyone knows this. This is a play advantage we can use. Getting prices higher just makes the producers listed above even more money and they are all minting it already.
In the current economic “squeeze” SA producers should play to their advantage I feel.
Srebbat | 19 August 2022
I think this misses the point that French, Italian and Spanish wine doesn’t have a USP either. They are defined by each region and each region’s USP. But what is a USP? Soil? Climate? Variety? Could anyone define the USP of Chianti, Rioja or Burgundy apart from those attributes?
I can’t help thinking this type of simplistic marketing, whereby one must have a point of difference, ignores the history and culture which define premium wine regions that South Africa must ultimately compete with.
While natural, modern competitors are the likes of Chile and Australia, should South Africa’s point of difference not be that we are neither of those. South Africa is creating it’s own identity based on its diverse regions that reflect terroir suited to the right cultivar. We are becoming much more like Europe in that respect and fighting against it for the sake of diversity will only work against the opportunity it will eventually provide.
South African wine shouldn’t take the short cut to identity by succumbing to fast track, short term marketing. It’s a longer journey which many producers are beginning to recognise. Let nature take its course and all will be well.
BvR | 19 August 2022
Interesting article Michael and it provokes a few thoughts. Firstly, I believe the old vine Chenin story, is a great story and one that could be told for some time still. There is a sense of haste in your article that we should move on from this to make that plan B sooner than later but I think it’s been an incredible “gateway drug” for fine wine consumers to realise that something from the continent is not always best. It’s put SA wines on the table of many a dinner party in SW1 where it simply would never have previously. This has gotten us behind enemy lines where we can now roll out the troops, which in my humble opinion is the following. The “same” wine for less. Bear with me.
From a wine buyers perspective (professional not consumer), the SA top end proposition is a tricky one as it runs the risk of cannibalising sales of your European wines. If you can sell a punter a wine for £80, why sell him a wine that’s just as good for £20. The economics for the pro buyer doesn’t make sense. So there is an inherent prejudice for the vast majority of buyers to pull the wool over the eyes of consumers. And those that are more savvy/curious and ask all the right questions about alternatives, easily get shown down the corridor of old vine Chenin as it doesn’t necessarily cannibalise too much and at the same time is impossible to avoid due to the sheer publicity around it.
For those that drink an array of fine wine from SA, across the cultivars, I think the proposition is clear, the “same “ wine for less. Mid level Bordeaux for £60-100 or a Paul Sauer/First Verse/Lady May/Rabelais/V/Vilafonte/Fusion V/MR de Compostella/ Crescendo etc for half the price or less. A £70-120 Cote Rotie or a Porseleinberg/Mullineux/Lismore/Epilogue/Ava/Savage/Stars in the Dark/Reyneke for half the price or less. The same can be said for Pinot Noir, Chardonnay, straight Cabs and even some southern Rhone varietals. Note the success of Soldaat and Naude Grenache when put against the worlds best. Not to mention the fact that you could take the same wines to the table where the price tag is mid to high 3 figures and they settle in very comfortably amongst their peers.
SA seems to be good at growing many varietals and with the recent shift in focus to terroir and advanced viticulture, combined with our ability to move swiftly (more so than our European counterparts), there is no reason why we can’t be the “value copy” of top Continental wines. I appreciate Chile and Argentina could do the same, but that shouldn’t matter. SA can be Coke, they can be Pepsi. And by the very top end of SA continuing their price acceleration to get closer to their global counterparts, as they deserve to, it pulls up the ceiling for “2nd and 3rd growth” to fill the void. With the price of Vilafonte, Compostella, Rabelais, PS, Lady May, Mullineux, etc now becoming beyond the reach of most local consumers, their attention turns to Crescendo, Cornerstone and new wines coming from exciting wine makers for half that price and allows them to create a new client base who will then follow them as their price rises over the next decade to match the 1st Growths, allowing the next wave to come through again. This continues to build “brand SA” as top wines for good value and this positioning should then allow even the bulk sellers to achieve more as that perception has changed from the current.
Is this not the path that SA should follow? Yes it will take time. Decades probably. But we’re ahead of our South American counterparts because of the OVC Trojan horse that has gotten us at the right table. Now we just need to ensure we send the cavalry, followed by the infantry. And we need to find a way of getting around the buyer (not consumer) that doesn’t want to cannibalise their current trade.
Michael Fridjhon | 19 August 2022
You make a compelling case though you will find that many people would argue – and already do – that this approach would consign South Africa into the discount category pretty much forever.
Do you have an answer for this?
BvR | 20 August 2022
Im suggesting that the discount is purely for a period in time, till a wine has received the following it deserves at which point the price starts moving upwards. This is what’s happened everywhere else as supply and demand starts biting. We’ve all heard the stories of how cheap Burgundy used to be. Maybe that was a very well executed strategy? Some of the wines mentioned like De Compostella, Mullineux single sites, Series C, Palladius, Columella etc are now already priced at much less of a discount to their peers and much of that acceleration has happened in the last 3 years or so. I can only imagine there will be more parity in another 5 years, again making room for the current R300 wines to move up to R600, the 200 to get to 300 and so forth.
Michael Fridjhon | 20 August 2022
Getting out of a discount hole takes a very long time: that’s why we’re in the trouble we are in
BvR | 21 August 2022
Thank you for the debate Michael. My knowledge about the industry is but a grain of sand compared to your Kalahari, I am but a passionate consumer and collector. But I’m confused by your comment. We’re naturally discounted against our counterparts from Europe due to the weakness of the Rand. So the price is set in R in the local market as a starting point. So that’s not a discount strategy in the local market. Then when it comes to exporting to Europe, there needs to be some sort of premium/multiple to get the wine to the UK for instance. And that needs to be within reason. So the price rises starts locally, encouraging the very best to continue increasing their prices as demand outstrips supply. It would naturally create a discounted starting point compared to European wines. A bottle of EU wine in the UK trades for a very similar price to its local price (pre Brexit anyways). We can’t have SA wines trade for many multiples more than the local market as savvy buyers would feel they are overpaying for the wine. And let’s not forget, that the European market thrives in (and is possibly reliant on) the annual “flash sale” at significant discounts known as En Primeur….
Michael Fridjhon | 21 August 2022
Some of the problem occurred post 1994 when our wineries were making good money supplying ordinary wine at the prices set by the UK supermarkets. Since then the average SA price point in the UK has not moved much whereas domestic inflation has made these exports less attractive from a revenue point of view but essential from a surplus disposal perspective. There’s been a significant increase in bulk wine sales which further depress price points (and therefore quality perceptions).
However you’re wrong to think that our more upmarket wineries do as well out of exports as they do locally. Domestic on shelf prices are significantly higher than export prices. This was not always there case.
A wine which retails in SA for R450 is exported for between R150 and R200. The Rand Pound exchange rate today is the same as it was 20 years ago but domestic inflation has barrelled ahead, so producers are losing potential margin when they sell their wines abroad (even before you take into account their marketing costs in foreign markets – travel, accommodation etc) With agent margins, taxes shipping and duties its on shelf price in the UK is probably 4 to 5 times higher. So the problem is not one of cranking up prices in the domestic market: it’s one of getting consumers in our major export markets to pay the equivalent (in terms of value of money/buying power).
BvR | 22 August 2022
Thank you very much for the clarification.
Su Birch | 18 August 2022
The strap line always was “variety is in our nature'” to refelct both the fact that South Africa does not have a single lead variety and the diversity of our natural world. It was a powerful statement, but consistently misquoted. And yes, it was ahead of its time.
Michael Fridjhon | 19 August 2022
Thanks Su. Apologies for misquoting it – though the fact that it is constantly misquoted suggests that the diversity message might have been stronger. In any event, it was ahead of its time – sadly