One Cape wine industry or two?

An interesting article by Edo Heyns in the latest edition of Wineland, the industry magazine he edits, got me thinking again about the unity of the South African wine industry – more particularly about whether it doesn’t make more sense to think in terms of two industries: a larger bulk-oriented one founded in the cooperatives and former co-operatives, and a smaller but more quality-ambitious one based on the private producers – with merchants like Distell, DGB and KWV having significant roles in both, of course. This is a position which I tend to find analytically useful, though I’m open to argument and can see some problems with it.

Edo doesn’t make the distinction – and in his editorial (available here), which takes up points made in his article, he even implicitly denies it (I’ll come back to that). The article gives facts and figures which show, rather worryingly, that the recent pattern of uprootings and plantings in the Cape (including varietal choice and rootstocks) indicate that “the industry” is set on a high-yield, lower-quality future. “This is highlighted”, Edo’s editorial points out, “by the 2013 and 2014 bumper crops, produced from fewer and decreasing vineyards.”

It’s hard not to agree with the overall conclusion, of course. I hear this sort of depressing news all over – when viticulturist Rosa Kruger tells me, for example, of more and more low-yielding, high-quality old vines being ripped up, and of decent vineyards being abandoned. Basically, in the current set-up it’s not as easy for a grape farmer to make money out of fewer excellent grapes as it is out of plentiful mediocre ones, unfortunately, hence the trend that Edo analyses.

Incidentally, it’s worth pointing out the sad truth that the South African wine industry as a whole has just about always been content to aim for the bottom. It goes back to the nineteenth century, and even earlier. The whole period of KWV rule in the 20th century was about expanding vineyards in the hot, irrigated interior (Northern Cape, Olifants River valley, Breede River valley) and also encouraging high yields through clonal choice and other matters, and paying insufficient attention to virus. Meanwhile Tim Hamilton-Russell had to battle mightily to be allowed to market his finer wines from the Hemel-en-Aarde.

So, nothing new in the grapefarmers’ belief that high yields rather than high quality is the way to go.

But the essence of the last two decades of the South African wine revolution has been quality. In the eyes of the world it hasn’t been about the bulk industry – though undoubtedly the big wine producers have been obliged to raise their game in response to international demand. If, however, there’s been a change in national reputation – and there most unquestionably has – it hasn’t been so much because the wines on the lowest shelves of British and German supermarkets have improved, or that Sweden can now find vast amounts of pleasant, cheap rosé here. Those things are true, but that’s not where the critical weight has been. It’s been Sadie and Badenhorst and Kanonkop and Cluver, etc, etc, and a host of exciting tiny labels, that have made the international press and the international market, to an extent, look at something called South African wine with new and shining eyes.

And this “industry” that is pulling up low-yielding vines and planting new, easier-to-sell varieties on more productive rootstock? Let’s not forget that the Mullineux are also planting, with a very different outcome in mind; that there are a numerous tiny cellars committed to making great wine from low-yielding vines, and that some important estates are tuning up their viticultural standards.

These are not producers to be ignored by losing them them within “the industry”, just because those with lower expectations constitute the majority – and also the majority of VinPro clients and the readers of the wine magazine they publish, WineLand.

Edo Heyns tries to umbilically connect the two parts of the industry in his editorial: “While I’m certainly not contending that South Africa is not capable of producing either world class, top-end wines or easy-drinking quaffers,” he writes, “it is difficult to marry these two sustainably as the signature characteristics of an industry that accounts for only 4% of the world’s total wine production.”

That’s debatable, unless somehow that “4%” is very significant for a reason I can’t see. Italy and Spain, for example, I think I’m right in saying, get a lower average price for their wines in the UK than does New Zealand, yet their top, highly reputed wines get astronomical prices. Basically, these countries produce mostly cheap and/or low-quality wines, which doesn’t seem to affect their ability to also have a high reputation for some areas and for some producers.

I can’t see why the eternal desire of most Cape winegrape-growers to resort to the lowest levels of ambition must always drag down the others. Let’s hope they come right, but meanwhile, just because high-yield Cape chenin blanc will sell in boxes on the bottom shelves of European supermarkets as “dry white”, that doesn’t mean that Alheit magnetic North Mountain Makstok is not going to become an international, expensive success.

South Africa is surely destined to be known as the producer of both good value cheap and easy wine and brilliant, respected, sought after stuff. Certainly, the task of the bulk producers is made easier by the success of the ambitious, and the achievements of the latter will be diminished by the grim, penny-pinching attitude of the others. But they are compatible. Call it one industry if you will, but at least admit that there are at least two radically distinct parts to it that, up to a point, can operate independently, with totally different worldviews and ambitions. They’re doing so now.

13 thoughts on “One Cape wine industry or two?

  1. You see Tim it is because people like yourself write about areas being HOT, too cold, too whatever that the consumer thinks that. How much time have you spent in the Olifants River, Orange River or Breede Kloof to make these assessments or are you also going by what so many old-regime people have said?? Do you realise that the Swartland, Paarl or Wellington is most probably hotter than any of these regions??

    Everyone keep talking about cool climates making the best wine which is unfounded and not fact!Your beloved Swartland have also proven that.In the same breath low yields do NOT guarantee good quality…

  2. Thanks for the comment, Colyn. But please don’t quote selectively: I didn’t say just “hot” – I said “hot,irrigated” – which the Swartland is not, nor are the vineyards providing the best Olifants River wines I know of (probably Breedekloof too). And I’ve tasted a great many wines from those areas, on which my assessments are based. The point of those interior areas IN GENERAl is, precisely, high yields from heat and water (plus loads of chemicals) – but obviously this doesn’t apply to all wines from there (just the vast majority).

    I have no problem with hot vineyards, and have been explicit about this on many ocasions. I wrote, eg, on Grape about Eben Sadie’s Voetpad vineyard, which produces a great wine. I said: “I even half-heartedly picked a nearly-full lugbox of its meagre yield of grapes one year, in dreadful early-morning heat, fearful of snakes. (‘This vineyard is at the gates of hell!’ said Eben Sadie.)”

  3. Hi Tim,

    “depressing news all over – when viticulturist Rosa Kruger tells me, for example, of more and more low-yielding, high-quality old vines being ripped up, and of decent vineyards being abandoned. Basically, in the current set-up it’s not as easy for a grape farmer to make money out of fewer excellent grapes as it is out of plentiful mediocre ones.”

    ..Could some sort of crowd funding support the farmers for these precious low yield vines? Maybe Chris Alheit could V nicely be asked if he’d like to make the wine from these and the investors get the wine.
    How do we set that up Tim?

    • Dear Jonnie

      The website IAMOLD is going strong and we are presently hard at work to form a more formal platform to protect the old vines of this country. Busy with it … watch this space… and thank you so much for the interest. Rosa Kruger

  4. Rosa kruger has told me on several occasions that the farmers of these old vines, even when they get good prices for the grapes, can’t be bothered to care for them. It’s a mindset that needs to change.

  5. Jonnie – that’s a generous thought. Trouble is, there are lots of these vineyards, and we need a longer-term sustainable solution. As Rosa indicated, there are people thinking similarly and working on the problem. But think about your point and the idea that what is needed is for more people to become aware of the problem, and make a point of buying the great wines that are often made from these old vines – I wondered if some sort of specific marketing exercise might help, including (sigh) perhaps a sticker on bottles indicating that this it’s made from an “official” old vine….

  6. What is considered a good price for old vine grapes. I hear winemakers sigh when they have to pay R7500 for a ton. I would say double or triple that and it is still a good deal when you can make a great wine out of it.

  7. Dear Tim,

    Thanks for your thoughts on the idea. I suppose all the usual lines of bringing a wine to the attention of the pubic is useful. Even the dreaded ‘sticker’, but in the sea of wines it may get diluted. Targeting us wine anoraks out there in to some sort of investment/share might be a way of guaranteeing income for the farm. A sort of ‘en primeur’if a winemaker of note can also be involved, and endorsed by yourself Tim so we know it’s legit, honest and upright.
    The business of selling/renting vines on say French terrior isn’t a new concept, and has thousands of subscribers handing their money over,- so reasonably successful.
    I’d be in for the fun of it…anyone else out there feel the same?

  8. Its about economics, nothing more nothing less. A farmer needs about R45 000 per hectare to make it worthwhile. This includes planting as well as running costs, and something to live off. If his/her old vineyard is producing 5 tonnes a hectare, he should receive R9 000 a tonne. A dryland old vine farmer can probably get by on less, probably in the region of R30 000 a hectare. So if his/her 1 hectare vineyard produces 2 tonnes, which is fair for an old vine chenin, the fashionable producer on the Perdeberg should not pay less than R15 000 a tonne. Failure to do so makes the whole value chain unsustainable.

    In a higher yelding area of 20 tonne a hectare,a price of R2500 is economically sustainable.

    This is the major issue the industry faces. Speak to the nurserymen in Wellington and they will tell you that most of their sales are of the high yielding white varieties on Ramsey. As well as some red on Ramsey which is quality disaster. Hardly destined for quality, probably will not even be dignified by a glass bottle.

    SA wine is too cheap on the international markets and we do not have a strong market to take up the slack. The direction that the industry has taken bothers me intensely. It is all about mechanisation and high production. But it is understandable.

    It will end in tears, like it has in Australia. Our marketing needs to be better, distribution better, so that more money makes its way to the primary producer, not just the winery.

    • Hi Peter, I am glad you can survive on R45000 per hectare. I did the math recently and we need at least R65 000/ ha to keep planting grapes and afloat in the industry. As you know I stand with one foot in the bulk market and the other my own higher end brand, and the way production cost etc is creeping up on us, the profit margin is scary.I am glad I produce my own grapes, because in the next decade or so there are going to be fewer old vineyards for everybody to buy their grapes from if the prices do not go up drastically. As another farmer quoted recently :”Even onions beat
      an average performing vineyard these days…”

  9. ..great information Peter.

    Any idea how much a quality winemaker would charge to make the wine. Understand its relative to how its made & matured, barrel or no barrel etc . But a ballpark figure would be really interesting

    Regards
    Jonnie

  10. This topic needs an entire seminar on its own. The SA Wine Industry, such as it is, is made up of large and small brand owners as is every other Wine Industry around the Globe. Choosing where to play and what to play with determines your commercial position. Pretty simple really and not worth the wringing of hands that one hears permanently from various sources. Where you stand on this point of view is always determined by where you sit.

  11. How long is a string? New wood, old wood, no wood? What are the volumes involved? An efficient medium to large producer has cellar costs in the region of R700 per tonne processed. That is R1.00 per litre. But a small producer’s costs will be a lot more as they just cannot be efficient. Then comes choice of wood. All new wood is about R40 per litre, but thankfully less is used these day. Label costs vary enormously depending on order size and quality. Big orders will be in the region of R0.75 for front and back, whilst very small orders will be over R5.00.

    There are so many variables on costs, but some wineries can sell wine at R15.00 a bottle whereas other need at least 5 times that to break eve. Hope this helps.

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