SA wines too cheap to remain sustainable

PREMIUM South African wines are changing hands for prices well below their value and, without caution to ensure these products received their due financial reward, the industry is at serious risk of not remaining sustainable.

This was at the heart of UK wine judge and internationally recognised writer Tim Atkin’s keynote address at the 42nd annual Nederburg Auction held in Paarl at the weekend.

“Cheap prices are very damaging to South Africa, which remains marooned close to the bottom of the list of the world’s exporters when it comes to profitability.

“Only Spain, a country that receives R6 billion in annual subsidies from the EU and its government, has a lower per-litre price at €1.09 (R17.25) than South Africa’s €1.30,” Atkin pointed out.

It was almost ironic that the auction prices this year achieved an all-time high rand per litre price of R740.

Auctioneers Anthony Barne of Bonhams and David Elswood of Christie’s knocked down 10 506 litres of wine with total sales rising 23 percent over last year’s prices.

That was despite a 4 percent dip in the volume under the hammer.

“It is a clear endorsement from buyers worldwide, indicating a strong appetite exists for fine, mature South African,” auction manager Dalene Steyn said.

The De Wetshof Chardonnay Finesse 1993 led the charge for the whites, achieving a record price of R2 000 per 750ml bottle. The red wines showed a 50 percent hike in the average price per litre to R961. The Zonnebloem Shiraz 1976 fetched an unsurpassed R22 000 for three 750ml bottles.

Tsogo Sun was the top buyer, spending more than R1 million, followed by the Spar Group and the Singita group of luxury game lodges.

During the charity auction, the hammer came down on a single bottle of Petrus 1988, signed by Christian Moueix, at R70 000.

Atkin said the South African wine industry was among the most exciting and positive things about this country, contributing R36 billion annually to gross domestic product.

It employed thousands and was an industry conveying “an upbeat and positive image” of the Cape and its beautiful winelands.

However, while there has never been so much great South African wine available, they remained “dramatically under-priced” with it being hard to think of another country delivering such spectacular value for money.

“(These wines) will surely increase in price as South Africa is recognised globally as a source of remarkable and unique wines,” he said.

Atkin also raised the proverbial elephant in the room – profitability. Linked to low prices was the threat to old vines, a dwindling resource he believed should be protected in a country where producers typically replaced their vines every 25 years.

Old vines yield lower crops of higher quality fruit, but if producers and consumers are unwilling to pay the premium for that fruit, farmers can’t afford to keep them in the ground.

Prices could damage local wine industry