Resilience of South African winemakers
LIFE for South Africa’s 800 or so wine producers has not been easy for most of the past decade. Once the annualised percentage decline in the value of the rand fell below their input cost inflation, most suffered enormous margin erosion or real losses.
Despite this, there have been surprisingly few bankruptcies; lots of anxious bankers, many (relatively) impoverished shareholders, but only a countable number of failures.
It’s impossible not to admire the resilience of the group as a whole. Darwinian adapt-or-die strategies have played a role. Many have changed their focus, reducing their dependence on the wine business. Others have found cost savings that would have eluded professional business consultants.
Mostly, however, they’ve deferred essential investment in their vineyards and cellars, or they’ve carved up their farms.
Since the financial crisis of 2008, it hasn’t been all that easy to find buyers for real estate — at least not at better-than-fire-sale prices. Redevelopment (never an easy option, given zoning restrictions) has saved relatively few. Instead, to sell off vineyards they have been obliged to find the rarest of creatures, incurable optimists/fellow suckers/egotistical millionaires/lifestyle junkies, ready to take the plunge.
The increase in the number of new brands coming to market over this period (300-400 by my count, and still growing) tells you that there are more of those dream buyers out there than a credible writer of fiction would dare to suggest.
In this same decade whole new viticultural areas have been created and old ones transformed. Elgin, Elim, the west coast, Klein Karoo and the Garden Route have probably seen the most statistically significant change, though even the more traditional appellations such as Paarl, Stellenbosch, Tulbagh and Robertson reflect the extent of this investment.
Naspers ’s Koos Bekker has created a show property — now called Babylonstoren — on the slopes of the Simonsberg, next door to Backsberg. By the time a full range of wines is ready to come to market, the site (with its organic vegetable garden, restaurant, country house accommodation, new cellar and vineyards) will be something of a beacon on the Klapmuts-Simondium Road. First National Bank’s Michael Jordaan and his wife, Rose, approached the restoration of Bartinney, the Banhoek property on which Jordaan grew up (before it was sold to a largely absentee and neglectful foreign investor), in a low-profile and more domestic kind of way. They already have good chardonnay and cabernet in the market, a much-sought-after sauvignon blanc, and a value-for-money second label designed to empty the cellar between one vintage and the next.
The Elgin revolution has been completely different. Mostly it has been driven by the reinvention of deciduous fruit farms as grape (rather than wine) properties, though on the way several of the newcomers have achieved striking results. Almenkerk (sauvignon blanc), Highlands Road (pinot noir) and Shannon (merlot) have joined Oak Valley and Paul Cluver in raising the profile of an area which is increasingly regarded as one of three prime sources of cool-climate fruit in the Cape.
The Swartland has been stumbling towards anarchic coherence (or coherent anarchy). On the one hand, the lease arrangement entered into by Leeuwenkuil’s Willie Dreyer with the Swartland Co-op has brought some commercial savvy to the region’s biggest processing facility. On the other, the number of boutique operations has increased significantly over the period. In addition to the high-profile players such as Eben Sadie, Chris and Andrea Mullineux, Adi Badenhorst and Marc Kent who are invested in the region, there are now ever more rugged individualists such as Orangerie’s Pieter Euvrard and Lammershoek’s Craig Hawkins.
While the rest of the wine world has been contracting, or mired in caution, the South African lunatic fringe extends from Abingdon (near Howick in KwaZulu-Natal), via Bramon (Plettenberg Bay), Sjinn near Swellendam and way up the west coast to Fryer’s Cove and beyond.
The days when anything worth drinking came from within a 100km radius of Cape Town are distant history. South Africa’s adventure with wine is only just beginning.
First published in Business Day on 20th July 2012