After decades of quality, S. African winemakers still searching for $$$
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LOOKING out at his 50-hectare estate in a valley nestled below South Africa’s Helderberg mountains, winemaker Ken Forrester beams with pride in his achievements over 20 years in the business.
“We never had a bad year, it’s been a consistent grow,” said Forrester, who is based in Stellenbosch — the wine region just north of Cape Town.
But like many South African vineyard owners, he is nervous about what the future holds for the industry, facing price pressure and for many an unsustainable return on investment.
“Look at this moisture, it’s perfect, this one is ready to be picked,” Forrester said as he caressed a handful of chenin blanc grapes.
“It’s very important to pick the grapes at the right time. If not, the blend that you’re creating is an average one, and with an average one you achieve nothing because anyone else can do it.”
Last year, “Mr Chenin”— as he is known to his friends — made 500,000 bottles of his trademark versatile, zesty white.
But increasing quantity will not be enough to keep his business viable.
“There’s a critical price problem for the South African wines. It’s very difficult to get the right prices,” he said.
Cape Town’s Vinpro winemakers association says 40 percent of its 3,200 members are loss-making and 900 have thrown in the towel in the past decade even as national production rose about 50 percent between 2005 and 2015 to 9.68 million hectoliters with 4.12 million exported.
Last year production fell 19 percent, the Paris-based International Organisation of Vine and Wine said.
“South African wine producers have an average 2 percent return on investment for their wine production and that is too low to be sustainable,” said Vinpro’s Edo Heyns.
Image and branding
Despite the challenges, wine production remains vital to South Africa’s economy: it employs 300,000 people and in 2015 contributed US$2.8 billion to South Africa’s GDP.
“We need to get better prices,” said Heyns. “South African brands are often viewed as value for money only. That needs to shift for quality, image and branding.”
Forrester agrees, lamenting exports of mainly cheap wines, calling it “a bad mistake because this positioned us incorrectly in the market.”
Former Springboks flanker Jan “Bolen” Coetzee wore the national side’s jersey six times before following his forebears and buying a vineyard in Stellenbosch in 1980.
Coetzee, now 72, is critical of the recent quantitative rather than qualitative approach, even though South Africa is now the world’s eighth largest wine producer.
“When the market opened up to exports in 1994, everybody was curious about South African. But instead of selling our better wines, we were selling bulk wines by millions of liters. The only kind of brand we had was price, and the price was cheap,” he said.
Although South African wines have begun to break onto the international stage and win critical recognition, they are still saddled with their humble viticultural origins.
Those origins go back three centuries, but the industry took a hit notably in the 1980s amid international sanctions imposed over apartheid.
After those sanctions were lifted, producers moved to offload stocks, with little heed for price.
“I was shocked in Europe the other day because guys are willing to spend more for a bottle of water from Norway... than for a bottle of South African wine,” said Coetzee.
In a bid to increase the market value of the country’s output, Wines of South Africa has sought to reshape the perceptions of overseas buyers.
“We have 500 odd wine brands but we don’t have one that stands out and is recognized worldwide. That’s one of our challenges,” said WOSA chief executive Siobhan Thompson.
Forced to do battle with new world wines from Australia and Chile, South Africa is struggling in traditional markets like Germany and Britain while expanding into China and elsewhere in Africa.
Experts warn the industry is facing an uphill struggle when it comes to growing the domestic market and attracting newly affluent drinkers from among the black majority.
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