Old Mutual Trophy Wine Show 2009: State of the (vinous) Nation

Finally, SA Wines Depict Our Terroir
The world of Cape wine has not been an easy place for the better part of the past decade. A relatively robust currency has made it tougher to milk exports while the domestic market - inundated with waves of newcomers - has become overtraded. A welter of regulations - many mainly BEE in nature - has replaced the ever-diminishing presence of the Department of Agriculture. The authority of the state - for the wine industry, as for most of the country - has come to mean a source of harassment rather than a force for facilitation.

On a more positive note, growers and producers who have taken the better part of 15 years to dovetail their product development programme with the expectations of their major markets, appear to be facing the home straight. There is a general consensus - between international buyers, critics and commentators - that Cape wine is beginning to cohere, both in product and in marketing terms. There is a promise, a sense of what South African wine is actually about, which international consumers are starting to understand in a more precise way and which an increasingly significant percentage of wines on offer are beginning to fulfil.

Cape wine is beginning to cohere, both in product and in marketing terms.

Much of this is the result of a generally healthier vineyard environment. South Africa is a long way off beating the endemic virus problem but the newer plantings are staying healthier for longer, and the older vineyards are being managed in a way which seems to be reducing the incidence and the severity of the infection. The result is that basic fruit quality is palpably better across the board. Not withstanding the still unsubstantiated claims by a few British wine writers that Cape wine suffers from a peculiar "burnt rubber" aroma, the general consensus is that there is a brightness and freshness to what is on offer which sets current releases apart from the wines made in the 1990s.

There is also evidence of a greater sense of focus among producers across a range of price points. Ten years ago much of what went into the larger blends came from fruit farmed without any particular wine style or market in mind. Growers grew grapes and took their chances on what the potential buyers needed. Wholesalers shopped around, using price as the primary mechanism of selection. In the end, their blending skills were required to optimise the virtues - and minimise the faults - of what came into their cellars. The idea that they could commission growers to produce to a specification was very much in its infancy.

It is not only the price advantage associated with a weak currency which drives the demand for South African wine. The pipeline has been cleared of junk and near junk.

The past year or two has seen a greater quantity of interesting, well managed fruit available to producer-wholesaler-exporters whose international market access and logistics management sets them apart from the players of a decade ago. These are players as focused in their route to market as they have come to be in their production strategies. Is it any surprise that - in the midst of the financial markets' tsunami of 2008 - exports of South African wine continued to show double digit growth?

Accordingly, there is a sense of optimism among Cape producers which has not been dampened by the recent Rand strength - a measure perhaps of their sense that it is not only the price advantage associated with a weak currency which drives the demand for South African wine. The pipeline has been cleared of junk and near junk (mostly sold more than a year ago in bulk to the booming resources markets where demand was insatiable ahead of the financial meltdown.) Without a stock overhang to dampen pricing optimism, grapes are again trading at levels which make new vineyard investment possible.

South Africa's export status has also benefited from the drought afflicting large parts of Australia. Suddenly the Antipodes - amongst the most important suppliers of wine to Western Europe and an increasingly influential source of mid-priced wine to the US - is short of material. Certainly the discounting which made supermarket gondola ends prohibitively expensive territory for Rand-funded marketing budgets are not under the same competitive pressure now that they were three years ago.

Cheerful as most of this news appears to be, life in the Cape wine industry is not without its concerns. For those who worry about the massive export dependence, the failure to show any significant growth in the local market is a matter of real anxiety. Volumes sold outside the country's borders now exceed domestic sales, and while that is indeed the sign of a healthily balanced trading position, a further tilt in the direction of markets over which producers have little influence must at least be a cause for reflection.

More importantly, the failure of the wine industry to share in the dividends of the country's transformation could have more sinister implications. Some argue that the growing rift between wine producers and the (not so) "new" South Africa is potentially problematic. At its most elementary level, the problem is expressed in the stand-off between Government and the industry in matters ranging from export assistance to licensing. Deeper down however, the relatively low incidence of black ownership of wine farms and the political distance between the ANC (dominating national government) and the DA (dominating provincial government in the Western Cape) leaves the whole industry exposed to legislation aimed at enforcing transformation

For those who worry about the massive export dependence, the failure to show any significant growth in the local market is a matter of real anxiety. Volumes sold outside the country's borders now exceed domestic sales.

Grape growing and wine producing are activities fraught with uncertainty. At the best of times the sector is not robust. Wine farming may seem like the ultimate lifestyle choice, but profitability is always under pressure precisely for the reason that those who choose to go into it undervalue the income component because of the quality-of-life factor.

In the next five years the relationship between the country's wine producers and middle class South Africa will have to strengthen dramatically if the exposure to petulant retaliation by officials seeking to make an example of what is perceived to be a colonial anachronism is to be avoided. But how is this to be achieved? Certainly not by making wine too esoteric to be understood by the wider market, nor by ignoring the important black elites who dominate the capitals of the country's many provinces. The Cape wine industry is remarkably isolated in the domestic market - and however much this may appeal to the frontier mentality which still permeates the wine growing culture, it's not a wise strategy in an environment in which the ANC has just been returned to power with a considerable majority.

Now must be the time for a major thrust into the domestic market - not because exports are slowing (though this could easily happen) but because the relatively healthy state of the industry's finances make this somewhat discretionary decision possible for the moment. In a country as polarised as South Africa - where social, economic and political issues create a spectrum as wide as it is treacherous - those who are engaged in an industry as burdened with baggage as wine (and alcohol) production must act pre-emptively to secure their future.

The past 15 years have seen the country's producers launch a very successful foray into the global wine market. Their task there is by no means complete but they are approaching what Churchill would have called "the end of the beginning". In this time they have largely neglected what is happening at home and their challenge now is to engage actively with the South Africa that has been evolving behind their backs - that is, if they don't wish to find themselves dispossessed strangers in their own land.