Does imported wine offer value?

A flood of value-for-money wine imports means the local wine lover has rarely had it so good. Christian Eedes investigates the state of wine retail in South Africa.

It is arguable that 15 August 1985 changed a nation, right down to its wine drinking habits. It was the day President PW Botha of South Africa's ruling National Party delivered a long-awaited policy address that became known as the "Rubicon speech".

 

In it, he declared that he was committed to reforming the apartheid system, but at his own pace and on his own terms. It had been anticipated that the speech would announce sweeping new reforms, but Botha's message was rather one of unrepentant defiance. Massive capital outflows ensued, international sanctions were imposed and the rand went tumbling.

A confrontation of apocalyptic proportions seemed inevitable, but instead a political miracle occurred. The entrenched ruling elite was persuaded to negotiate itself out of power and make way for non-racial democracy.

On a microcosmic level, however, an upper middle class used to drinking the world's finest wines had to forgo this pleasure, after the national currency underwent a profound depreciation.

"Prior to 1985, the premium on top imported wine was relatively little," recalls Michael Fridjhon, who owns Reciprocal, a wine mail-order business supplying top quality overseas wine to private customers in South Africa. "You could buy [Bordeaux first growth] Château Mouton Rothschild for R14 a bottle. At the time, Johan Rupert suggested that it was a measure of how overvalued the rand was when one of the world's best wines was so affordable."

At the time, R14 a bottle for a first growth Bordeaux equated to no more than a 100% premium on the best local wine. Consider today a bottle of first growth sells for at least 10 times the price of a top South African red, say Vergelegen Estate at around R250 a bottle, and it might appear that the South African-based wine enthusiast must content himself with domestic produce.

This, however, is shortsighted, for while the premium on classed growths from Bordeaux has risen disproportionately, there is plenty of value to be had from international wines from other areas.

"At a price point of around R120, South African wines face serious competition. All of a sudden you can choose from thousands of wines from around the globe," comments Fridjhon.

"At R90 a bottle, you can drink a really nice Shiraz-Grenache blend from [top Rhône producer] Domaine Perrin. There's good Châteauneuf-du-Pape, St.-Joseph and Croze Hermitage available for prices in the late hundreds. Similarly good village appellation Burgundy. And over R200 a bottle, you're into genuinely serious territory. Burgundy Premier Cru and Châteauneuf-du-Pape from 100-year-old vines. Spectacular stuff," says Fridjhon.

Nevertheless, Fridjhon is concerned about the apparent closed-minded attitude of many of the current generation of wine drinkers in South Africa. "Since the mid '80s, local wine drinkers have become very parochial. They live by the Platter guide, and seem unaware of the value to be had from international wines." He points to Cloudy Bay Sauvignon Blanc from New Zealand, a benchmark example of a wine from this variety. The small quotas made available locally sell out over the course of the year. Cape collectibles hardly reach the market before they are taken up, many at much higher prices.

Fridjhon sees a particular role for WINE magazine to fulfil. He refers to the recent spate of price hikes that local producers have inflicted on the consumer as "madness", the quality of wine not having increased proportionately over the same period. Moreover, the local industry is operating in a vacuum to some degree, because there is so little cross calibration of quality versus price.

He suggests that when WINE magazine undertakes a review of any particular category of wine, a few international benchmarks be included. The consumer would soon work out that local wine prices don't make sense. "Local producers must come to realise that they can't keep on increasing their prices by 10 or 20% every year, and continue to sell the stuff."

According to Fridjhon, some responsibility for the exorbitant prices being charged for top end local wines can also be laid at the foot of the consumer. "There's a certain type of customer who buys wine to show off. He acquires a cult wine at over R400 a bottle as a trophy. He serves it at a dinner party for the status it confers on him. His guests are impressed, whereas if he were to serve a Guigal Côte Rotie, no-one would know its significance."

Champagne is the exception that proves the rule, according to Fridjhon. Everyone knows how expensive it is, so its prestige is secure and it continues to sell in much the same quantities it did 10 years ago, despite volumes for other categories of international wine being down.

How do Fridjhon's experiences correspond with what's happening at a retail level?

Carrie Adams, co-owner of liquor retailer Norman Good- fellow's in Johannesburg, is significantly more upbeat about the potential for international wines, with 30% of her stock being imported.

Adams recounts that her customers for international wines fall into two categories. Firstly, there is a small but loyal bank of customers that enjoy the best of France, and who can afford just about any price. Secondly, there is an emerging "yuppie" customer base in the 35-40 year age group, typically working in the financial services.

Those in this bracket are just beginning to explore international wines," explains Adams. "You start them off at a low price point, and then when they realise they can get the same quality, if not better, as South African wines for less money, they're hooked, and quickly shop up."

Adams admits to "fantastic support" from the residents of Johannesburg's affluent northern suburbs. "They read, they travel and they've got disposable income," she says.

Adams is critical of the recent spate of local price hikes, and suggests with the flood of value-for-money imports that are now coming into South Africa, "everything is going in favour of the customer". In particular, wines from the EU are significantly cheaper subsequent to the scrapping of a 25% duty in terms of a trade agreement with South Africa.

Caroline Rillema, owner of Caroline's Fine Wine Cellar in Cape Town, appears not to enjoy quite the same level of interest in international wines from her customer base. "I have a handful of collectors who buy serious quantities, but mostly it's the industry or wine clubs buying one or two bottles for tastings," says Rillema.

Loath to offend her Jewish clientele, Rillema can't help telling the following joke: "Why did God invent Christians? Somebody's got to buy retail." Her point is that the customer is very often inclined to by-pass her as a retailer and shop from an agent selling wholesale.

International wine is a tough sell, she relates. "Customers have a much greater level of knowledge concerning local wines. They've visited the property in many instances, and feel comfortable about purchasing even quite expensive wines. With the international wines, you've got to do a lot more convincing."

Rillema is instructive when it comes to discussing which particular international regions offer the best value. "Le Carillon de L'Angelus [the second label from St. Emilion property Château L'Angelus] at R389 a bottle is not really value when you can get Ernie Els 2001, the pièce de résistance from Rust en Vrede in Stellenbosch, at much the same price." Far better to go for something from Southern France, Australia or New Zealand, she says.

On the matter of Bordeaux offering relatively poor value, Fridjhon concurs. "We have very serious Bordeaux-style reds in SA that offer the second label wines of Bordeaux classed growths good competition in terms of value for money." Fridjhon goes on to say that many of these second label wines - particularly from lesser chateaux - are "not hugely appealing" - being disproportionately expensive relative to the quality they offer. He argues that a single-vineyard Châteauneuf-du-Pape at an equivalent price offers far more value.

Rillema highlights her range of Italian wines: grape varieties (Sangiovese, Barbera, Nebbiolo) more or less specific to Italy, and growing conditions that ensure wines of flavour and structure unobtainable in South Africa.

She also contends that Sauternes, the rich dessert wines of Bordeaux, offer excellent value relative to the good but increasingly expensive dessert wines of South Africa. She points to second growth Château Filhot selling at R285 for a full 750ml bottle as an example.

The aromatic wines of Germany and the Alsace region in France do not sell well, but according to Rillema, this is not difficult to understand. "I have a situation where a customer can buy a Gewürztraminer or Riesling from [leading Stellenbosch farm] Villiera at under R30 or he can spend five times that for something from overseas that he's not entirely sure about. Not surprisingly, I sell next to nothing when it comes to imported aromatics."

Interestingly enough, Rillema and Fridjhon disagree significantly when it comes to the case of Sadie Family Wines Columella, the limited release Shiraz-Mouvèdre blend made by avant-garde winemaker Eben Sadie from grapes sourced in the Swartland. This wine has a retail price of around R400 a bottle, putting it in direct competition with the best from the Rhône, the home of similar style wines.

Rillema believes that Columella is "superb" and "deserves a place in a collector's cellar". Consequently, she'd rather her customers spent R400 on this local wine than on anything from Guigal or Chapoutier, big Rhône producers available anywhere in the world.

Fridjhon says that the Columella enjoys its very high price as much because of its rarity as its quality. He admits that this is not unusual. There are cult wines in the United States whose price is determined by their Parker rating and the relative scarcity this leads to.

Though a retailer, Rillema is increasingly inclined to import direct and is excited by the value to be had from the wines of the Languedoc in Southern France, for instance. She will soon be stocking wines from the Corbières and Minervois appellations that will retail for under R100.

Nevertheless, Rillema says she carries her international range out of love for the subject of wine. "I could make much more money by putting my cash flow in the bank and earning interest." She pleads for greater customer support, saying she can't sit on stock for months.

To encourage cautious locals, she suggests that buying top-end international wine is an investment, but an investment in enjoyment. "Opening a properly aged Barolo or Barbaresco (from Piedmont in Northwest Italy) is a particular pleasure," she contends.

Plenty of realistically priced imports out there. All that's needed is a more adventurous attitude on the part of the consumer…