Where does SA fit in the American market?

By , 1 March 2016



The USA is the world’s largest wine consuming nation so understanding the complexities of this market is important for a local producer-wholesaler like Distell. Yesterday, Niel Bester, winemaker at Plaisir de Merle, the Paarl property owned by Distell, hosted a tasting featuring his wines up against US counterparts picked by the Distell’s US agent Terlato Wine Group as representing direct competition. Also in the line-up were some of South Africa’s most highly regarded wines plus some French and Australian benchmarks at the price points in question.

Chamonix vs Stag's Leap

SA vs USA.

First a flight of 15 examples of Chardonnay were I had Chamonix Reserve 2014 tied with Stag’s Leap Napa Valley 2014 as my two top wines and Paul Cluver Seven Flags 2014 and Sonoma-Cutrer Sonoma Coast 2013 just behind. What was a bit disconcerting was that South Africa’s very best was not hugely better than wines that sell for around $25 a bottle in the US, which is to say not entry level but not the very top-end either. On a more positive note, these wines were stylistically quite close together, from which we can assume South African Chardonnay is not going to struggle to find favour among consumers in the US.

It’s when we tasted a flight of Cabernet Sauvignon followed by red blends that things got perplexing. My top two wine in the Cab flight were Kleine Zalze Vineyard Selection 2012 (5 Stars in Platter’s 2016) and Le Riche Reserve 2013, both of which I liked for their depth of fruit, balance and the overall savoury impression that they made while the Ormes de Pez 2011, Saint-Estèphe Cru Bourgeois , was also pretty smart. The US wines which sold for around $35 a bottle (including the likes of Markham 2012, Rutherford Hill 2012 and Mount Veeder 2012) tended to be much easier in style – more red than black fruit, plenty of oak-derived aromatics and flavours, soft and smooth.

Stylistic differences became even more marked in the case of the blends. Here my wine of the flight was the Rust en Vrede Estate 2012, which despite its alcohol of 15.07%, appeared classical in the sense of being savoury and tannic in relation to what was on offer from the US – the Justin Isoceles 2012 from Paso Robles and the Orin Swift Cellars Papillon Red 2012 from Napa Valley (both around $70 a bottle) were borderline undrinkable for me on account of the dead-fruit profile they presented.

Also in the line-up was the 2012 from Rauzan-Segla, the Margaux Second Growth, which was typically Bordeaux being slightly angular but very youthful and not far behind the Rust en Vrede for me. It goes for around $65 a bottle in the US and presumably doesn’t struggle to sell. The question for the likes of Plaisir de Merle then becomes: Do you take your cue from Napa Valley and the rest of California or Bordeaux when it comes to trying to make it in the US?


5 comment(s)

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    joe | 2 March 2016

    I’m with Geoff on this too. Above $50 per bottle, probably fewer than 1% of wine drinkers can actually derive extra pleasure from the taste for every extra dollar spent. Arguably the threshold above which a higher price no longer yields a discernibly tastier product is even lower — maybe around $20-$30 for 99% of consumers. As a consequence, people buying wines for >>$30 are doing so based on the enjoyment they get from the brand and the story. Building up a brand name that allows people to enjoy spending $50 or $100 per bottle on your wine typically takes decades; the only exceptions to this are if you can somehow string together a few 95+ scores from RP/WE/WS for a few vintages in a row (ala Klein Constantia and their sweet stuff).

    Therefore it seems to make sense to target the $10-$30 range. This is a regime where SA should be able to compete very favourably. Most California, Oregon and Washington State red wines cost at least $20 for something decent, but you don’t need to pay $50 or $100; for example, the Clos du Val Cab ( http://www.klwines.com/p/i?i=1228086 ) is a wonderful wine that one can buy for $23 in grocery stores (such as Safeway). There are many SA reds that could compete very favourably at this price point, especially with the recent depreciation of the ZAR, but even the best online store for wine in the US, K&L, has a paltry offering from SA in this range: http://bit.ly/1TT0DYj — they offer only one Cab under $30, the Botanica Big Flower. There are a great many Cabs offered in SA for under $10; for example, see http://www.carolineswine.com/catalog/south-african-wine/reds/cabernet-sauvignon — why are basically none of these making it to California?! For example, the Glen Carlou Cabernet Sauvignon 2013 is <$7 in SA. This could easily sell for $15-$20 here, leaving plenty of room for shipping and additional retail markup. There are at least 50 other Cabs for <$10 in SA that could sell briskly in the US for $15-$20, but no one is selling them! The retailers that do offer SA wines tend to focus on a few high-end examples (e.g., the latest Swartland stuff) and a large amount of plonk that isn't even sold in SA.

    Every time I return to SA from California I have to load up my suitcase with $10-$20 wines from SA that I love, and which inexplicably are not being sold here!

    Regarding the taste of $70 reds in California; Christian is right that they're generally very jammy, and there's a segment of the market that laps that up. However, plenty of much less fruity Bordeaux gets sold in the US too, so there is room for both styles.

    Marthelize | 2 March 2016

    I think Geoffrey has not only the most relevant view because of his location, but also his accurate summary of the situation. When I first read the post, I felt doubtful about the relevance of the brands in terms of market share.
    In the SA-Wines-in-the-USA market, quality and market share do not correlate strongly at the moment. We have some great wines out there – I work for a company that brings in and sells direct-to-customer around 70 of our strongest wine brands – but we work on a different model than retail. What you see in the liquor stores, supermarkets and even the trendiest wine bars is dismal at best, too often for us to be comfortable with.
    Also, just because there’s a brand built in SA doesn’t mean it translates (at all) to the USA.
    Interesting to hear the PDM comments about the US market, considering they’re probably Distell’s lowest volume exports, with Two Oceans, Obikwa and even Fleur Du Cap making up bulk through Terlato.

    Francois | 2 March 2016

    None of the brands being compared were built in a few years; its decades of work.
    Replicating content and label designs is all fair and well, but if you “visit” the US market only once every couple of years, which is the norm then dont be surprised with sluggish sales. Out of sight, out of mind.
    Wine remains something that needs to be chosen, represented, sold and consumed by humans. Have a quick look at the top sellng SA brands…. Also the brands who’s staff need to replace their passports every year.
    Pricing in bigbrand stores is obviously a deciding factor, but a human is still the one that needs to select it before it hits the shelf.

    geoffrey miller | 1 March 2016

    I think that this tasting is a bit of a red herring. I say this as a educated American wine consumer who regularly purchases SA wines in the US.

    From my perspective, the sweet spot in the US is in the $15-20 range, not the higher priced wines tasted in this article. For example, the Sonoma Cutrer chard is available in big box wine stores for under $17.

    I buy badenhorst chenin and red blend for $12, Glen Carlou Chard for 14 as well. In this price range, the SA wines compete very well with US made wines at the same price point.

    Just my 2 cents from across the pond


    Kwispedoor | 1 March 2016

    Of course it’s okay if wineries shape their wines to fit into a certain market – a winery is a business and people need to survive. I just think that wine is then being made into a mere commodity and find it strange how (sometimes) talk of passion, terroir, etc. still pervade through the marketing message of such wines. Taste preferences and fashion evolve, change and come and go, but fine wine will always be fine… Either way, every single SA wine that gets traction in the tricky US market at this stage arguably does more good than bad for the greater good of our local industry.

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