WINE NEWS: ALCOHOL BAN LIFTED, BUT A LONG ROAD TO RECOVERY FOR THE SOUTH AFRICAN WINE INDUSTRY

The South African wine industry acknowledges today’s announcement by President Ramaphosa to resume local trade and distribution of alcohol under alert level 2 from midnight 17 August 2020, but says the industry still has a long road to recovery.

“Although we are grateful to start trading and delivering online sales again, we are dismayed at the extent of the damage caused to our industry during the temporary ban on exports and extended restrictions on local sales,” says Rico Basson, MD of the wine industry organization Vinpro.

“It might be too little too late. Many wine businesses have already closed down and a long road to recovery lies ahead for the industry as a whole,” says Basson.

The industry is believed to have lost more than R7 billion since the introduction of sales restrictions in March 2020. Following the initial nine-week ban on local sales, five-week ban on exports and second domestic sales ban, Vinpro estimates that more than 80 wineries and 350 wine grape producers would go out of business over the next 18 months, with a potential loss of more than 21 000 jobs across the value-chain.

Vinpro has been working closely with industry partners on a disaster recovery plan to address the urgent need to stabilize the sector, including the extension of further excise relief for the current year, as well as the 2021 season, addressing bottlenecks and challenges at the Cape Town Port and formulating solutions to reduce a current wine surplus of around 300 million litres.

“The wine industry is geared to reopen domestic trade and distribution with all necessary health and safety regulations in place, while focusing on changing behaviour with regard to responsible production, promotion, trade and consumption.”

 

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

Argentina joins New Zealand, South Africa, Chile, Canada and the US/California in forming a New World Wine Alliance to boost performance in the Chinese market

Industry body Wines of Argentina has signed an agreement with Shanghai’s Grapea & Co to be part of the alliance aimed at furthering the perception of New World wine in China.

The project, which began in June and will run until October this year, will take the form of a marketing and educational campaign supported by Grapea & Co’s Yang Lu, China’s first Master Sommelier.

The campaign will focus on both online content, transmitted through social media and blogging platforms, as well as wine and sommelier competitions.

The free content will be available on the New World Wine WeChat account and will consist of 18 virtual masterclasses on New World wine regions and 42 videos on topics such as the wine history, viticulture, winemaking, news, cultural traditions and food and wine matching.

These will also be made available on other platforms including Tik Tok, Dianping, and T-Mall.

In addition, the initiative will also feature 22 live broadcasts from key industry figures and popular wine bloggers.

According to the latest data, the scheme has already proved successful. In the first 15 days after the launch in June, the content platforms recorded a total of 68,000 visits and more than 8,000 views of video content.

Commenting on Argentina’s involvement in the project, Maximiliano Hernández Toso, who took over as president of Wines of Argentina earlier this year, said: “Being part of a project of this magnitude reflects the recognition that Argentine wine has gained internationally and the development of its industry.

“I believe that this is a great opportunity for our flagship product to expose its full potential, supporting and accompanying the drive of the collective strength of regions and countries that scale the world stage. We are confident of the impact of continued education and in working with international opinion leaders, such as, in this case, Yang Lu, the only Chinese Master Sommelier in the world.”

It follows news that Argentina was the only country to record an increase in both import volume and value of wine sent to China between January and May this year.

Good News: South Africa wine exports go-ahead during lockdown

The South African wine industry has been given authorization to export wines during the country’s current lockdown.

Following intense lobbying of the South Africa government by an Industry Exporters Task Team, the Minister of Transport stated in a release yesterday, April 7: “During the lockdown period, the transportation of the wines and any other fresh produce products at the seaports and international Airports Designated as Port of Entry for export is allowed.”

“Agricultural Cargo is allowed to be transported to seaports and International Airports Designated as Ports of Entry and exported to the relevant destination.”

The move is important for South Africa’s wine producers and fruit farmers as much of their produce is exported, and 50% of all wine produced is exported.

Rico Basson of Vinpro, which represents 3,500 members of the South African wine industry, tweeted, “We are very grateful for the dispensation to allow the exports of South African Wine”.

A statement from The Exporters Task Team also praised the decision: “Government and all the respective role-players [have shown] an understanding for the industry’s challenges through this concession, as nearly half of South Africa’s wine production is exported and a restriction on exports would have a severe effect on wine-related businesses, but most importantly the livelihood of close to 300,000 people employed by the wine industry value-chain.”

The Task Team emphasized that it recognized “the severity” of the Covid-19 pandemic, asking all businesses and people to “strictly adhere to the regulations” set out by government to ensure the safety of all employees during the lockdown.

Describing the development as “very good news for the industry”, Wines of South Africa‘s (WoSA) UK market manager Jo Wehring clarified that, “this exemption only relates to finished product that is ready for shipping in either bulk or packaged format”, adding it is “a massive step in the right direction and will bring much relief”.

WoSA recently announced that the 2020 vintage would deliver ‘exceptional wines’, after a last minute concession from government allowed harvesting to take place.

Italy is named the world’s best wine country

Italy has been ranked as the best country in the world for wine lovers in a recent survey by Lastminute.com.

The survey compared thirty wine-producing countries by various criteria with Italy finishing with the highest score. It beat out other counties due to the fact that it offers the most wine tasting experiences; with 993 overall to choose from, and Italy has a total of 21 wine regions.

But how did Italy top France?

In three instances:

1. The number of wine tasting experiences – Italy 993 vs. France 406;
2. Italy has more vineyards open to the public – Italy 33 vs. France 31; and
3. The average price of a bottle of wine is less in Italy – €4.77 vs. €5.73 in France.

For the record, France came second, Spain third, South Africa fourth, Portugal fifth, while Australia came in 15th place, Canada 24th, and the US at 27th. The UK, which is fast making a name for itself for the quality of its sparkling wines, came in 30th place on the list.

https://www.lastminute.com/en/discover/wine-lovers-travel-index