Van Loveren’s cup over­flows

Since 1980, the suc­cess­ful fam­ily-owned Van Loveren en­ter­prise started play­ing a pi­o­neer­ing role in the lo­cal wine in­dus­try. From 1998 to 2013 its turnover in­creased by 2 300%. Al­though this growth has flat­tened out over the past three years, Van Loveren

Finweek English Edition - - ON THE MONEY - By Jac­ques Claassen

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against a back­drop of ma­jes­tic moun­tains and with Cape Dutch gables and ver­dant val­leys com­plet­ing the pic­ture, the lo­cal wine in­dus­try is of­ten ro­man­ti­cised. This bodes well for wine tourism, but it’s not a true re­flec­tion of the pro­duc­tion re­al­i­ties that wine pro­duc­ers face at grass-roots level.

Wine farm­ers are cur­rently in a process of diver­si­fi­ca­tion and con­sol­i­da­tion. This can be as­cribed to a more at­trac­tive net farm­ing in­come per hectare in other agri­cul­tural sec­tors, such as cit­rus and some de­cid­u­ous and stone fruit types. More­over, the cur­rent drought ex­ac­er­bates the sit­u­a­tion for some wine pro­duc­ers.

“Within two years South Africa could ex­pe­ri­ence a wine short­age – for the first time in many years,” says Phillip Retief, CEO of Van Loveren Fam­ily Vine­yards near Robert­son. “Should we need to im­port wine, prices of lo­cal wines will also show an in­crease, which will be a pos­i­tive sit­u­a­tion for pro­duc­ers.”

Af­ter a pe­riod of ex­po­nen­tial growth since the early 1990s, 2006 iron­i­cally ush­ered in a new pe­riod of old vine­yards be­ing re­moved at a greater rate than new ones be­ing planted. This trend is ex­pected to con­tinue over the next five years. Wine pro­duc­tion nev­er­the­less reached record highs be­tween 2010 and 2014 thanks to im­proved pro­duc­tion tech­niques and favourable cli­matic con­di­tions dur­ing the said pe­riod. CEO of Van Loveren Fam­ily Vine­yards

Ac­cord­ing to Retief, who is also vice chair­man of the pro­duc­ers’ or­gan­i­sa­tion Vin­pro, the wine in­dus­try is cur­rently ex­pe­ri­enc­ing the bot­tom of an eco­nomic cy­cle.

Asked about Van Loveren’s own suc­cesses since 1980 (see box), Retief points out that it all starts with be­ing adapt­able, sus­tain­able, prof­itable, in­no­va­tive and creat­ing value for stake­hold­ers. In or­der to farm prof­itably, Van Loveren tries to achieve high yields of good qual­ity wine grapes. The av­er­age yield is 17t/ha.

“To be sus­tain­able on a com­mer­cial ba­sis we can­not af­ford to make only wine from low-yield vine­yards for the ul­tra-premium mar­ket. That seg­ment of the mar­ket pyra­mid forms the apex and is un­for­tu­nately too small to be your only source of in­come,” says Retief.

Af­ter com­ple­tion of their stud­ies, the third-gen­er­a­tion Retiefs, Hen­nie Jr, Bus­sel, Phillip and Neil, in­tro­duced sev­eral changes to the fam­ily en­ter­prise. Phillip be­came in­volved in 1998 at the ten­der age of 26 and re­calls: “Some­times we were sim­ply run­ning with new ideas. As four cousins we started a pat­tern of help­ing one an­other to take risks; it prob­a­bly gave us self-con­fi­dence at a sub­con­cious level.”

The third-gen­er­a­tion Retiefs started mak­ing their mark with a process of de­vel­op­ing and es­tab­lish­ing new brands, of which Four Cousins be­came their big­gest and one of the most suc­cess­ful wine brands in South Africa.

Phillip Retief

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