Wine Wednesdays With William: A Closer Look At South Africa’s Wine Business

Every five or six months at the Wine Room, I get a call from Bob, who shows me his latest imports from South Africa. The majority are good quality varietal wines, and attractively priced. The labels are a bit of a disappointment, printed in one-color, and they’re generally uninformative. Curiously, they don’t seem to correspond to any wine sold in South Africa. With mixed feelings, I’ll buy a lot of them. Intermingled with these are wines that are internationally renowned, of the highest quality and expensive.

When the South Africa wine industry rejoined the global marketplace after the ending of apartheid, it joined as the world’s least expensive wine producer, and it remains so today. Only those producers who operate with industrial economies of scale, on the cheapest vineyards, are making money. The better vineyard sites are generally unprofitable, and they make up the bulk of the 35 percent of South African vineyards that have been dug up since 2005 to be replaced by more profitable crops, like apples. The trend is accelerating.

VinPro represents the South African wine industry. They report that “only 13 percent of the 3300 producers farm at sustainable income levels, 44 percent are operating at break-even and 40 percent are making a loss.” Most of the wines Bob brings to me are from the Stellenbosch region, where just eight percent of the wineries are healthily profitable. The unsold wine made by the loss-makers is being sold to people like Bob, who put their own labels on it and sell it to people like me. Until these very good wines command a price that reflects the quality in the bottle, the fire sale of quality wine from South Africa will continue.

Wine Challenge No.11:
Take two varietal wines at the same price point, one from South Africa and one from South America or New Zealand. Pick Sauvignon Blanc, as it is unlikely to be oaked and will allow you to compare quality more easily. How are the wines similar, and how do they differ?

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