Research from University of Cape Town shows old vines add value

Research from the University of Cape Town shows that using old vine fruit earns winemakers more money.

South Africa has finally discovered – and celebrated – its treasure trove of old vineyards. A country that typically renewed its plantings every 15 to 20 years, pretty much as soon as the yields began to decline, was an unlikely candidate to develop a culture of ancient vines.

Part of the reason for the constant renewal of vineyards lies in the history of the industry. Until the modern era, it existed primarily to supply cheap wine to the domestic market and to provide distilling grapes to the local brandy trade. Accordingly, it was planted to high yielding varieties – or at least to varieties which could be induced to increase their yields if the local market preferred quantity to quality.

There was also another reason for the frequent replacement of vineyards: the widespread incidence of leaf-roll virus. Within a few years of a vine reaching productive maturity, the vine leaves, lacking essential chlorophyll, turn russet long before the vintage. Since the vine is unable to convert sunlight into fruit ripeness, as the season advances it shows signs of stress; acidity declines in the grapes while the sugar levels remain resolutely low. Within a few years the yields drop. By the time a vineyard has reached what should be peak maturity it is economically unviable and must be replaced.

In the pre-modern era of the Cape wine industry roughly a third of the national vineyard was Chenin Blanc (putting South Africa’s share at over 50% of the world’s plantings) followed by Cinsaut. The two varieties accounted for half of all vine grapes in South Africa. With the Mandela presidency in 1994 came an extraordinary worldwide demand for Cape wine. Exports, which in 1992 had totaled a mere 21m liters – roughly 2% of total production – doubled and redoubled every year. At the end of the decade they had grown sevenfold to over 140m liters. In 2008 they crossed the 400m liter mark for the first time.

In this post-Apartheid export boom, vineyards were uprooted simply to meet the expectations of a market that wanted Cabernet and Chardonnay rather than Chenin and Cinsaut.

Rescue Plan

A number of initiatives were undertaken to save focus varieties, of which the most important was a campaign launched in the early 1990s to preserve the country’s Chenin heritage. Happily, Chenin is less susceptible to leaf-roll, so there were many older vineyards yielding reasonable quantities of often fabulous fruit. There was less success with Cinsaut: many of the older plantings fell victim to the simple demands of the international supermarket trade and were replaced with Merlot and Shiraz.

In the early 2000s Rosa Kruger, a viticulturist with a passion for the country’s viticultural heritage, began to research and create a record of the country’s oldest vines. Unsurprisingly, most were Chenin, though Grenache, Pinotage (a local crossing of Cinsaut and Pinot Noir), Semillon and Cinsaut were also present in more reduced amounts. At much the same time Eben Sadie, a producer who enjoyed a singular reputation for hand-crafted artisanal wines, began marketing some of these single-site rarities. His lead was followed by many of the younger, and more adventurous, winemakers. Suddenly, for the first time, it seemed as if it could be profitable to farm low yielding ancient vines.

At this point Johann Rupert, whose family had started one of the country’s major liquor companies and had then gone on to create Richemont (whose brands include Dunhill, Cartier and Mont Blanc), provided the seed capital to launch what is now known as the Old Vine Project. Making use of Rosa Kruger’s catalogue of the old vines, it identified just over 3,800ha of heritage vineyards, and then persuaded the authorities to certify wines produced exclusively from them.

In 2019 the University of Cape Town’s Graduate School of Business conducted research into the value that old vines bring to the selling price of the wines: its primary objective was to determine whether, given the inevitably lower yields associated with older vineyards, it was actually viable (from an economic rather than a sentimental perspective) to keep them in the ground.

Price Advantage

The research was able to quantify the retail price advantage of old vine fruit: all other factors being equal, it added R100 ($5.70) per bottle to the final product. Given that most wines sold from these varietals retail for less than R200, the connection to an old vineyard was significant – at this stage an estimated 30% to 50%. Typically, the fruit cost of a bottle of wine comprises a low percentage of the final selling price. Stellenbosch grape prices average less than R12000 per ton, or R20 per liter. Dry goods, oaking and processing cost would take this to R50. These are largely constant, unless a producer opts to use a high percentage of new wood. Doubling the fruit price only raises the input costs by 40%. If certified old vines add R100 to the price of a bottle of wine, this potentially means that grape prices could increase from R12000 to somewhere close to R60000.

This amount of upward price mobility is vast in the South Africa context: it more than compensates for the lower yields. Johann Rupert’s investment in the Old Vine Project has proved, beyond doubt, that well-sited virus-free older vines are worth nursing to the magical age of 35 years – at which point they acquire the Certified Heritage Vineyard seal. It may seem strange that the country’s most famous luxury goods mogul’s true legacy – at least in the world of wine – will rest on an act of generosity aimed at saving a dwindling number of old vines. But it is also apt. It is the combination of quality and rarity which ensures that there’s nothing artificial about the premium: on reflection, that has always been the unique selling proposition of the luxury goods business.

Source:  Wine Business International

France pours more aid as wine sector faces ‘Major Difficulties’

This week the government of France stepped up financial support for wine growers faced with a deep drop in demand after lockdowns closed restaurants and bars and U.S. tariffs curbed exports.

“The state will increase to 250 million euros its support plan to wine growing and we will request this aid to be distributed as quickly as possible because cash needs are pressing,” French Prime Minister Jean Castex said on Wednesday.

Castex made the announcement during a visit to the Menetou-Salon and Sancerre vineyards in the Loire region.

“The international situation, the health crisis, a drop in exports: our wine sector faces major difficulties. State support must continue and intensify,” Castex said on Twitter earlier.

France has already provided some support, but the wine industry has called for more action.

In April, the European Commission decided to support crisis management measures in wine and other agriculture sectors affected by the coronavirus crisis.

In May, France cleared a 140 million euro ($165.87 million)crisis mechanism to distill surplus wine into industrial alcohol to be used to produce hand sanitizers.

Then in June, the government unveiled an additional 30 million euros of support for the wine industry, including 15 million for the launch of a private storage scheme for two million hectolitres of surplus wine, an alternative to distilling.

In addition to the impact of COVID-19, France’s wine industry has suffered from U.S tariffs on imports imposed as part of the trade dispute between the European Union and the United States over aircraft subsidies.

Source:  Reuters

 

Reims Tourism Office offers free Champagne to promote tourism

Attracting tourists post-Covid is undoubtedly a challenge. The Greater Reims Council has launched a new initiative called “Champagne, to make your summer awesome!” Visitors to the city will be treated to a bottle of grower Champagne. The greeting has an undeniably elegant touch, though there are some strings attached.

 

A total of 3,000 bottles, sourced from 68 different producers, will be given (one/adult) to those who qualify. The giveaway is said to have cost €50,000.

 

This initiative was launched July 15 and is subject to certain criteria. To qualify, tourists must spend at least two consecutive nights in the City of Reims, or the surrounding area, and stay in a hotel, guesthouse or gîte. Airbnb does not qualify. Also, during their trip, visitors must eat in a local restaurant and order at least one dish and drink. Fast food outlets are excluded from the list. Finally, in order to qualify, tourists must provide proof that they have paid for one leisure activity, such as renting a kayak, a winery visit, bike hire, or cinema ticket. Once they have paid for these holiday treats, visitors are required to go to the Reims tourist information office to receive their complimentary bottle.

This follows news of poor sales of Champagne during the Covid-19 pandemic. Industry body Comité Champagne said that sales were down 32% for the period January to May compared to the same period in 2019.

17 ASSOCIATIONS DEMAND END TO WINE AND SPIRITS TARIFFS

17 associations representing both the US and European wine and spirit trades have submitted comments opposing proposals for further US tariffs on wine, beer and spirits. industry bodies have submitted comments to the United States Trade Representative (USTR) after news of another tariff review last month.

In addition to existing tariffs on still wine, Scotch whisky and liqueurs, the US said it was considering further levies of up to 100% on beer, gin and vodka made in France, Germany, Spain, and the UK.

The dispute relates to EU subsidies given to aviation company Airbus over US-based rival Boeing.

In their comments, the groups cited the latest data which revealed that US imports of Scotch whisky were down by almost 33% between October 2019 and May 2020, while imports of wine fell by 44% and liqueurs and cordials by 23% during the same period.

Analysis conducted by the Distilled Spirits Council of the United States (DISCUS), one of the groups to submit comments, warned that US tariffs on UK and EU wine, distilled spirits and beer could lead to as many as 95,900 job losses, depending on the extent of the tariffs.

In a joint statement, the group said: “Our 17 US, EU and UK associations are united in strong opposition to tariffs on beverage alcohol products. We are speaking with one voice in calling for the US administration and the European Commission to remove the current tariffs on spirits and wine from the EU and UK, and American whiskeys, and to forgo imposing any additional tariffs on beverage alcohol products. We hope Friday’s announcement by Airbus and the legislation passed in Washington State in March regarding civil aviation subsidies are significant steps toward the elimination of tariffs.

“Beverage alcohol sectors on both sides of the Atlantic have suffered enough. These tariffs are exacerbating the incredible burden hospitality businesses are experiencing with the widespread closures of bars and restaurants due to Covid-19. The US and EU need to seek measures to bolster hospitality jobs, not saddle businesses with unnecessary tariffs,” they added.

In October 2019, the US has imposed tariffs on US$7.5 billion worth of EU goods – including wine, spirits and liqueurs – as result of this dispute. The country first imposed 25% tariffs on drinks including Scotch whisky and wine (not over 14% ABV) made in France, Germany, Spain and the UK. The EU has stated that it may impose retaliatory tariffs on US rum, vodka, brandy and wine.

In a separate dispute in June 2018, the EU imposed a 25% tariff on all US whiskey imports. It is scheduled to increase these tariffs to 50% in spring 2021.

In addition to DISCUS, the 16 other associations include: SpiritsEurope, the Scotch Whisky Association, American Beverage Licensees, the National Retail Federation, the American Craft Spirits Association, the American Distilled Spirits Alliance, the National Council of Chain Restaurants, Kentucky Distillers’ Association, the National Association of Beverage Importers, the National Restaurant Association, the US Wine & Trade Alliance, WineAmerica, the Wine Institute, the Wine and Spirits Shippers Association, Wines & Spirits Wholesalers of America, and the National Association of Wine Retailers.

Source:  Drinks Business

The CIVB (Conseil Interprofessionnel du vin de Bordeaux) to set aside wines from 2020 to reduce oversupply

At its AGM last week, the Bordeaux wine marketing council CIVB unanimously approved the introduction of a reserve stock aimed at “reducing the increase in marketable inventories of red Bordeaux and Bordeaux Supérieur appellations”. By adopting an amendment to the three-year trade agreement for 2020-2023, the CIVB is pursuing the objective outlined last year by chairman Bernard Farges, which is “to re-establish a balance between supply and demand for Bordeaux wines”.

We are currently witnessing an imbalance in the market due to crop levels in excess of sales”, sums up Ann-Cécile Delavallade, head of the CIVB’s economic department. According to the statistician’s estimates, inventories of AOC Bordeaux should reach 2.2 million hectolitres during the 2019-2020 marketing season, which is a 21% rise in one year, before distillation is taken into account. Stocks of Bordeaux Supérieur are estimated at 1.05 million hl (+14%). “We are seeing an upward trend in stocks, requiring the introduction of regulatory measures”, stresses Delavallade.

The Bordeaux region will benefit from crisis distillation – 450,000 hectolitres are currently subsidized though an extension is needed. It will also cut its yields significantly in 2020, dropping to 50 hectolitres per hectare for Bordeaux, compared with 54 hl/ha in 2019. Nevertheless, the idea of introducing collective stocks is being viewed as a complementary measure. In practice, volumes set aside are “calculated on the basis of 2020 appellation applications: above 45 hl/ha for AOC Bordeaux and 43 hl/ha for AOC Bordeaux Supérieur, both within the limits of authorized annual yields”. This represents a 10% reduction in the immediate marketing potential of the two AOCs.