South Africa: conquering hero
South Africa secured a resounding victory when DRN recently polled 200 independent merchants in a bid to find which countries’ wines are performing best in the sector. It finished ahead of Italy, Argentina and Spain as the country growing sales in the strongest fashion and it is easy to see why. Quality has improved drastically in recent years. Classics from well-established regions are winning plaudits, a dynamic new wave of winemakers is pushing boundaries and producing intriguing offerings and at the very top end scores from critics speak for themselves.
But perhaps the finest praise it can get is that South African MW Greg Sherwood has started drinking it at home again. For years he turned to Burgundy, Bordeaux and Italy for his evening tipple, but now he is returning once more to his motherland. “I find myself drinking so much more South African wine again,” says Sherwood, of London indie Handford Fine Wines. “They are so affordable, at high quality, with such diversity.”
Diversity is what springs to mind the most when you consider South Africa – it is hard to think of a New World country that offers such a wide array of styles and unique selling points. “Australia, Chile, Argentina – it’s difficult for these countries to compete when they don’t have the diversity and USPs of South Africa,” says Sherwood.
But it is not just indies that are revelling in the price-to-quality ratio being offered by South Africa nowadays. Nielsen figures covering the multiples show that year-on-year sales are flat at £468 million (year to July 2017), which is an improvement after a couple of years of decline.
“South Africa is a fascinating country from a wine perspective,” says Gyles Walker, senior wine buyer at The Co-op. “It can basically produce anything you want as a customer. If you want varietal-led, great value, quality products then fantastic South Africa is your first stop. You can get entry-level Chardonnay, Sauvignon Blanc and Cabernet Sauvignon at really good quality, all the way up to the top icon brands that have been around for a number of years, and all the ladders in between.
“There are really exciting areas where winemakers are being unleashed. They know the farmers and the old vines and the quality of the grapes and they are so excited about what they can turn these grapes into. This whole generation is very confident and wants to try something different, but not in a scary way –
the wines they produce can still be understood by customers.”
Areas of excellence
South African government figures show that exports to the UK are up 1% in value, driven by bottled exports as bulk declines. This shows that the work being done by the likes of Handford, Hallgarten, Farr Vintners, Berry Bros and Fine & Rare at the fine wine end of the market is driving growth in the category.
Sherwood points to a few key areas in which South Africa is really excelling – white blends, trendy calling cards such as Chenin Blanc and Cinsault, and alternative warm climate varieties finding a great home in areas such as Swartland. “No one can do white blends like South Africa,” he says. “They have a classic flavour, good concentration and acidity. It’s like a white Burgundy alternative, but impossible to replicate anywhere else in the world. Nobody can challenge them.
“The Cape white blend in all its forms remains a very special category because the greatest expressions are not just conjured up creations. They are formidable, thoughtful wines with a sense of confidence, terroir, balance and delicious, synergistic flavours. Varieties you’d expect to be incongruous marry seamlessly and genuinely create a whole that is greater than the sum of its parts. This synergy factor is the Holy Grail that other international producers have found almost impossible to replicate. The South African wine industry is truly blessed to have this joker in its marketing hand.
“People in our store are just as happy to pick up a £25-£30 Chenin as they are to pick up a £30 white Burgundy or Italian, which is great.”
Sherwood has a particular soft spot for Duncan Savage’s wines and points to the new 2016 Are We There Yet? Touriga Nacional as showcasing the potential of warm-climate varieties in South Africa. He also highlights Eben Sadie as a great pioneer in this field. He says his private clients are piling into top-end South Africa in a big way and his main challenge is securing a large enough allocation as demand is so high among London merchants.
“It all bodes well for the broader industry because it has a trickle-down effect,” says Sherwood. “If the top guys are doing well the more modest wines will do well. I try to communicate to all South African producers that they should work together and not criticise each other. Working in co-operation and making the cake bigger works better than trying to steal other people’s pieces of cake.
“There is a lot of excitement from the new wave and the old school producers are realising they need to shout about their wines. There is a place for all these wines. These young guys all grew up drinking Stellenbosch classics and they have a soft spot for these wines, so there’s no point in criticising them when they get 95 points for an old vine Cinsault and saying Stellenbosch Cabernet is better. There’s a place for everyone.”
But Sherwood believes South Africa should not be competing at entry level. “At the middle to top end the quality gets better every year,” he says. “South Africa is revolving around the premium segment. It’s not sunshine, it’s terroir-driven fine wine. We have to focus on regionality.
“Lower-end wine is a difficult area because other countries do it better than South Africa, such as Chile, Australia and Spain. I don’t think we have the raw materials and structure of industry to hit those really entry-level price points with the quality those guys have.
“I have seen and tasted some interesting stuff, more in the high-street area. It’s the £10-plus retail level, like Majestic and Oddbins, and some quite good wines at £7-£10. But £5-£6 is not a market where exciting things are happening and are going to happen going forwards. Nobody can make any money selling £5 wines in supermarkets. There’s a place for those wines, but not from South Africa.”
Some would beg to differ. Walker at The Co-op has been impressed with the offerings at lower price points, which allow its customers to enjoy interesting wines during an era when disposable income is shrinking. “South Africa can produce a distinctive style of wine that our customers love,” he says. “The market is dominated by Australia and the majority of people enjoy those clean, fruit-forward wines, which South Africa can do.”
Walker continues: “South Africa still offers better value than most New World countries. It’s where we source some great value wines. The interesting area is that £6-£8 area, which is a gap one or two countries used to dominate and are moving away from. It can offer lower price points for people finding themselves struggling to buy Marlborough Sauvignon Blanc. The majority of our customers are facing real budgetary issues and spending money on luxuries like wine [can be a challenge], so we want to offer constant value and not price our customers out of exciting products. South Africa can help us in that way.”
Of course, South Africa also aligns well with The Co-op’s championing of Fairtrade products, and Walker says the quality here is strong. “We have talked to brand owners about why we support Fairtrade and many of them have come with us on a journey, sourced quality wines from Fairtrade farms and produced exclusive wines and blends of fantastic quality for us,” he says. “Kleine Zalze produced a Cabernet Sauvignon Reserve for £8.99, which is stunning and stacks up with everything else we have in the range. Kumala is the main brand for South Africa in UK retail and we worked with it for two years on producing a wine for us. It’s the first Fairtrade wine it has done.”
Anthony Van Schalkwyk, sales and marketing manager at Kleine Zalze, says: “I definitely think the demand for South African wine will increase due to Brexit and the weak pound. The stronger euro, US and Australian dollars will dramatically increase prices of wines from those countries and consumers and buyers will start looking for alternatives.
“South African wines are well-priced in general and provide amazing value. It is also time for brand South Africa to premiumise as we have always undersold ourselves, which might have worked when the rand was weak but, unfortunately, that is not the case anymore.”
Walker suggests that could come naturally to South Africa due to the improvement in winemaking ability. “Winemaking processes in South Africa have changed dramatically,” he says. “The grapes are fantastic quality and the winemakers have learned so much.” This has convinced The Co-op to champion the much maligned Pinotage again and it blew the retailer’s forecasts out of the water as it was embraced by a new generation that did not have old prejudices. “South Africa now gives reassurance to customers and I don’t think that consumer confidence was there five years ago,” says Walker.
Suppliers are confident that the next year will see South Africa continue its upward trajectory among UK retailers in the independent and multiple arenas. Andrew Steel, owner of Connoisseur Estates, says: “We have seen strong demand over the past 12 months from our independent retail customers for the Oldenburg Vineyards wines from Stellenbosch.
“They recognise the premium quality South Africa has to offer at competitive prices, with many expanding their South African range due to consumer demand.”
Alex Tilling, marketing manager at Armit Wines, says: “Innovation in winemaking and viticulture has had a massive impact on improving the quality of South African wines, which has really helped them to gain international recognition and popularity, notably in the UK, which has traditionally viewed South African wines as forming the lower end of the market with cheap brands.
“South African wines offer fantastic value for money, with the majority of the exceptional quality, high-end, small-production wines on the shelves at £30-£50 max, offering more opportunity for consumers to experiment at a high level.
“A new generation of winemakers has brought international experience and exposure, as well as a more fun, informal, knowledgeable and engaging approach to promoting themselves and their regions. This has captured the imagination of the UK wine trade, which of course filters down to consumers, through events such as the New Wave tasting, the Swartland Revolution, the Young Guns movement and creative and funky labels.”
It would not be a surprise, then, if South Africa finishes top of the pile in next year’s indies poll, returns to growth in the Nielsen figures and holds down its coveted spot at Sherwood’s dinner table.