Are there any really successful wine countries which do not have a more-or-less rich and interested domestic market? This in one of the things I’ve been pondering in response to winery-owner Dana Buys’s comment on my recent blog about some industry matters, including the miserable local price for grapes, so I’m going to make some risky flights with the idea.
Dana pointed out the vastly higher price for cabernet grapes in California’s top cab appellation, Napa (and the also high price in slightly less fashionable Sonoma). He puts the difference, fairly enough, on demand being so much higher for those grapes, but then does something which seems problematical to me – he blames the lack of demand on the pittance that South Africa spends on marketing (“generating more demand”).
Firstly, I’d have to say that Napa has an almost unmatched reputation outside Bordeaux for producing excellent cabernets (leave aside whether one likes the dominant style or not). I would venture that the Cape produces a handful of cabs and Bordeaux-style blends that could happily compete with the top end of California. But I’d also venture that Napa demonstrably produces very many more excellent wines. That’s the sort of performance that helps generate high prices for a region – not marketing.
We could take the results of the Six Nations wine competition to reinforce the point: at the top end, South Africa is great, but for now lacks comparative depth. Of the countries involved in that competition, it is only Australia (with New Zealand up to a point) that gets anything approaching the sort of wine prices (and hence grape prices) that California can. Why? It’s partly because of a longer-established reputation, but it’s also notable that Australia is the other rich country in the competition (though nowhere nearer as rich as the USA, and the number of wines with high prices is correspondingly lower). Chile, Argentina and South Africa are the poorer countries, struggling to build their international reputations, but with comparatively few expensive wines.
There are some objective factors, of course – for one thing, viticulture in California, based on well-trained Mexican gast-arbeiders, is at a much higher level than it (shamefully) is here.
But what I’m suggesting (and a whole lot more facts and figures would have to be computed arguing one way or another) is that Napa gets those high wine/grape prices not so much because of marketing, and not only that it is good wine-terroir, but at least partly because it finds itself in a country with a large number of immensely rich, not to mention patriotic, wine-drinkers. This establishes and builds the momentum.
The richness goes further than that. Think of the few bankers and IT moguls who’ve invested in the Cape winelands. When it comes to Napa, especially, multiply their disposable incomes by quite a lot, and multiply their numbers by even more. You could probably multiply their desire for showy, conspicuous consumption by quite a bit too. The result is an incomparably huge amount of investment in wineries and vineyards in Napa. There is also a lot of well-backed competition for the best grapes, which pushes up the price too.
So that the price thing goes in circles, up to a point. Spending more money improves standards, and leads to higher prices, which leads to more money available for investment. You could observe the same thing in Bordeaux, of course, where the lower end producers are always going to find it hard to catch up with the top end, at least partly because the top end is getting the big prices per bottle and is able to spend on improving quality.
OK, mention of Bordeaux would allow Dana to get in again and point to the importance of image. And I don’t deny the point, or deny that Cape wine would benefit from WOSA having a great deal more to spend on polishing the local image. But remember that most of WOSA’s income comes from the 80% of South African wine that is not competing with top-end Napa, but rather with lower-end wines from anywhere in the world. Politics sadly requires, therefore, that WOSA is constricted in how it spends its money – and of course, it is vitally important for the average grape price here that the lower-end wine is also successful.
But then it becomes clear that we should remember, I’d suggest to Dana, that Napa is not comparable to the Cape as a whole. Possibly it would be comparable, on a different scale, to, say, Constantia or the Hemel-en-Aarde, or just possibly Stellenbosch. There’s no question than 80% of Napa (or Sonoma) wine is produced by co-ops and big merchants. There’s no comparison.
Given the internationalism of the wine trade, the local market (and historically I’d include England for Bordeaux, Port, Sherry, etc) is no longer be as important as it was. But I reckon it remains vital. Another example – Spain (as a whole, Rioja and Sherry and the occasional winery apart) was nowhere till it hit boom times after joining the EU; Italy much the same. Portugal, a poor country by West European standards, mostly remains undeservedly marginal.
Basically, perhaps, there’s an international solidarity of the rich. Rich people like buying wine from rich countries – their own, or foreign.
There are many rich wine-buyers in South Africa, if not as many as there are rich whisky-buyers. I reckon a lot of the fancy wine buyers (including many wine-producers!) still suffer from cultural cringe and do very little local buying. Even where they should, if quality is what they’re after, which really mostly means the best Cape white wine.
All in all, given the way the world works right now, especially as economies falter, I think it’s a difficult path for South African wine. If I was a grape farmer, I wouldn’t be holding out a great deal of short-to-medium-term hope for grape prices.