A fair price to pay at the Cape Winemakers Guild Auction
14 November 2016
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Welcome to another episode of Old Mutual Live Wine edition, on mobile, on digital, on demand, I’m Jenny Crwys–Williams . The recent 32nd Cape Winemakers Guild Auction had total sales exceeding R13.8 million and new record wine prices for red, white, Methode Cap Classique and Port.
But what do these high prices, the top price by the way was for Kanonkop Paul Sauer 2013 and it reached the highest price ever paid for a red wine at the auction with a top bid of, well guess… R13 400 for a case of six, that’s got to set you back on your heels. What does it mean for the man and the woman in the street? I spoke to international wine judge and editor of Cheers, the redoubtable Fiona McDonald.
Fiona McDonald, really nice talking to you and it’s been two to three weeks since the Cape Wine Makers Guild Auction and it reset and rewrote the record books. But what is the importance of that for your ordinary man and woman in the street who just likes their wine?
Fiona McDonalds: I think the importance of the Cape Wine Guild is two-fold. Number one, to the man in the street it gives an indication of what’s happening at the top end of the market, at the rarefied stratospheric levels of a wine geekdom.
The second element is what the Cape Winemakers Guild is doing with regard to development of previously disadvantaged communities and actually enabling them to enter into the wine fraternity by means of their Development Trust and the protégé project.
JCW: That trust is really special and it’s working isn’t it?
FM: Very much so and it’s fantastic to see the people, some of the first protégés actually beginning to come through the system now and beginning to achieve. What they are given is like opportunities on steroids. It’s amazing and one shining example that I can think of, just off the top of my head is Natasha Boks of Nederburg. Who I see has just won some more awards for the white wines that she’s making at Nederburg. She was one of the first group of protégés that the Nedbank Cape Winemakers Guild were involved with.
Knock on effect of huge auction prices?
JCW: When you’re talking about haute couture and in a way we’re talking about wine haute couture in South African terms. There’s a trickledown effect in terms of, well, if the skirts are long there, then maybe the man and woman, well the woman in the street would like their skirts to be long as well.
Is that also what is happening with the Cape Winemakers Guild because I see that for the second consecutive year Kanonkop Paul Sauer 2013 featured the highest price ever paid for a red win at the auction. Would there not be ‘wannebe’ winemakers who would try and emulate that in some way?
FM: I think there’s definitely an element of that, just as there would be young designers who would want to emulate Karl Lagerfeld or other haute couture designers. Kanonkop Paul Sauer went for the highest price attained, was R13 400 for six bottles, which equates to R2 233 per bottle. Which is an alarming amount of money, even to me as a complete wine nerd. That’s kind of on par with international best examples. But it shouldn’t put anyone off because it is expensive, but there are still a lot of great value examples out there.
I think anything in life with aspiration, we aspire to owning a new car or having a bigger house or going on that overseas holiday with five-star accommodation. Aspiration is what drives your goals and your desire to achieve that. I think wanting to attain either a tasting of that bottle or as a winemaker to try and emulate the style of wine that is being made that is attaining those prices is a good thing.
JCW: For people who don’t know much about the Cape Winemakers Guild it just seems to me that, I’m going to start that again. When I went to the tasting of the Cape Winemakers Guild, I was really interested to see how small the quantities of some of these specialised wines actually were. Because they are made specifically for this auction are they not?
FM: That’s correct. When the Guild was started in 1985 and it was interesting to note that the first auction was held in Johannesburg at the Rosebank Hotel and there were just a total of only 18 lots. That was during the height of apartheid and the guys, when I say guys I’m talking about winemakers, they were feeling the pinch in terms of the lack of sharing of information and best practice.
A group of them got together and the intention was to try and taste in amongst each other and try and improve standards and try new things. It’s just snowballed from there. What happened with Cape Winemakers Guild is that yes, it is a by invitation only body/organisation and the idea is to try and raise standards and there’s been a heck of a lot that happens behind the scenes.
Yes, the auction is a tangible sign of that and very often there is only one barrel of a unique little pet project, winemakers are by nature inveterate experimenters. They always want to see what will happen if they push the envelope with this particular grape variety or that amount of time and wood or no commercial yeast added or whatever, or a combination of any of those.
That’s what the idea was behind the Guild that even amongst themselves, during the year, I think on a monthly or bi-monthly basis, they get together and they do technical tastings. They taste, it’ll be one of their members will have an opportunity to host a tasting and all the other members will come along and they will do a Riesling tasting.
I’ve been lucky enough to attend a few of those. I mention Riesling because I was invited by Carl Schultz of Hartenberg to join them and he hauled out some amazing wines which the organisation actually paid for and they are some of the best in the world.
All of these winemakers then really apply themselves diligently to tasting these wines and discussing them and pulling them apart. Either praising or criticising them and saying: Right, now we’ve all had a grip on Riesling from somewhere, how can we apply this? That’s where a lot of the technical stuff comes through with what they try.
JCW: It’s like a hothouse of wine talent basically and I find that very exciting.
Looking at some of the wines
JCW: I’m just going through some of the best-selling wines. Best-selling wines, we’ve mentioned Kanonkop and there Rust en Vrede, I think it was, the Auction Estate 2013, Boekenhoutskloof, the Syrah also sold incredible well and the Traildust Pinotage also. White wines, they seem to be divided in terms of the top selling wines, between Chardonnay and Chenin Blanc because those have suddenly become really hot to trot haven’t they?
FM: Very much. Chenin has been on a steep curve for the last 15-20 years and it really is exciting, not just South Africa but international commentators as well. Chardonnay will always be white Burgundy, it’s one of those wine varieties that just never goes out of fashion. Sorry, it went out of fashion amongst consumers quite dramatically in the early days of South African Chardonnay production, but it’s coming back.
It’s coming back because it’s definitely more subtle and more nuanced and the top white this year was Jordan Chardonnay Auction Selection 2015. Which went for R9 400 per six bottle case, which equates to R1 500 odd a bottle, which was pretty special. But then again, it’s a pretty special way. Jordan has always done incredibly well with Chardonnay.
If I’m not mistaken, at the Decanter World Wine Awards two years ago they were the top overall Chardonnay. That’s not just in the South African category, that’s globally. So that’s up against France, Australia, New Zealand, Chile, all the winemaking countries who actually entered Decanter. This year it was De Morgenzon, which won the same trophy. A very sound argument can be made for the fact that South Africa makes incredibly good Chardonnay and that are world class and these prices actually reflect that.
I think there is a growing body of opinion that South African Chenin Blanc is right up there and some of the country’s most edgy winemakers are looking to South Africa’s old vine heritage as the base of a lot of the Chenin that they are making. Those vines would have been in the ground for 30-40-50, 60 years in some cases. They already hand making and cossetting and gently nurturing these beautiful little grapes into some absolutely stunning wines.
Top buys seem to look out for consumers
JCW: I’m thinking, I’m listening to this and I think, oh, well, I would like to try some of these, even if it’s by the glass, I would like to try some of these. Again, the biggest buyer for the third year in a row was Tsogo Sun. Their purchases, I think, were close to R3 million in terms of the amount of wine. I understand their mark-ups are really modest in this field?
FM: Correct. They’ve actually made a principle decision not to do the normal 100-200% mark-up for restaurant prices, they are just adding a flat rate on the bottle price that they paid so that consumers can get to enjoy some of these super special wines by the glass or by the bottle, in their various establishments.
JCW: I think that’s actually fantastic in terms of encouraging people to try different wines, I really do laude them. But other top buyers, always the Butcher Shop & Grill, particularly the red wines, I think that’s what they specialise in. Singita and of course one forgets that Singita has now got, I don’t know how many of their luxury resorts you can actually go to. But it must be at least six and they buy significant amounts of wonderful wines.
FM: The Singita story is an interesting one simply because, I remember when I came to the Cape 16 years ago. Singita was one lodge and Francois Rautenbach who is their Wine Director started a very modest wine programme. Now they have storage facilities scattered around the country to supply, I can’t remember what their last count was. I remember Francois saying it’s approaching double digits, if not beyond.
There are a few more in the pipeline and to service that, they are very serious about the integrity of the process that they’ve put behind getting a bottle of wine to the consumer who is paying a lot of money to be at their resort and that is one of the most amazing showcases of South African wine to an international. And a discerning international traveller, that the country can offer.
They might buy wine at the Cape Winemakers Guild Auction or the Nederburg Auction or various other things, but they will store it until, in their opinion, it’s at optimal drinking. Very often a lot of the wine farmers actually go back to Francois and Singita and say: Can’t we buy some of that stock back from you. We’ll pay premium because we don’t have it in our library anymore. They’ve carefully kept it in their climate controlled facilities in Nelspruit and elsewhere and track its maturation.
JCW: I just think it’s absolutely fantastic and you can imagine sitting in the middle of the bush, wherever you happen to be, on a starry night, with a fire in front of you and just these wines that you can basically help yourself to. I think it’s a wonderful profile for food and wine as well as animals in the wild. Fiona, I also noticed that Hong Kong is getting in on the act. Crown Wine Sellers in Hong Kong, are we seeing more foreign buyers coming in to the Cape Winemakers Guild Auction?
The appeal to foreign buyers
FM: There have always been foreign buyers. The Eastern market used to be fairly brisk for South African wines, both at the Nederburg Auction and the CWG Auction, probably about 10-15 years ago. Then unfortunately with the global financial crash and the Tiger economy faltering slightly, it was hit. Because very often what Chinese and Taiwanese buyers would do is buy large lots of wine and they would use that for gifting purposes, which is a business tradition.
But having said that, the pattern of buying at CWG has predominantly been European. It’s interesting seeing the Eastern markets actually become more important and I think that ties in with the growth of appreciation of wine that we’re seeing in the Far Eastern markets. There are those who believe that the Far East is the way to go because particularly Chinese wine consumption is showing remarkable growth.
JCW: I see Dubai is buying quite a lot, Brazil and also interestingly enough for me, the United States of America. Because up until now, it’s been Napa Valley coming to South Africa as opposed to South Africa coming to Napa Valley so to speak.
FM: Yes, I was in the US about nine months ago and even in places like New York, unfortunately I’m one of those people who walk into wine shops and browses around the shelves and goes into supermarkets and creeps out the store detectives. By just browsing around the shelf, picking bottles up and putting them back and not buying anything, just because I like seeing what’s out there. Seeing what’s out there in the space and places like New York, their knowledge on South African wine is actually quite poor.
There are a few brands represented, there are a few individuals who have done really good jobs of marketing their own brands, but it needs a concerted. The problem within South Africa, we don’t have almost sufficient volume to supply the American market. Yes, we can produce really good quality wine at the top end, but it’s invariably done in very small quantities.
One of the CWG members, making fantastic wines, but in a rather small volume. A thousand or two thousand cases of wine is not going to go very far when you have a global following and people clamouring for your wines, be it in Hong Kong, Germany, London, New York and California.
JCW: It’s almost on a first-come, first-serve basis, or you get an allocation I suppose.
FM: Yes, and those allocations are hotly traded, it’s very much like trying to get your hands on a bottle of Screaming Eagle. You can inherit a spot on the waiting list if you’re lucky enough.
An auction brings out the true value of a wine
JCW: Don’t you just love that? It’s so preposterous, it’s absolutely wonderful. Fiona, just to sum up, sales of just under R14 million, almost R2 million more than the previous record. I was watching as the sales were coming in and people were saying: Oh my goodness, we’ve only been doing this for 10 minutes and we’ve got R2 million already. In your opinion, do you think this is another sign of the burgeoning wine industry from consumers point of view? Because consumers, I think, are becoming more interested in wines in South Africa.
FM: Jenny, it’s interesting, I look back at some figures and I went back to 2006, which is just ten years ago, it’s not a huge chunk of time. The total sale achieved in 2006 was R3.6 million, the average case price was R1 428. Let’s take Jordan Chardonnay Reserve, we’ve spoken about that wine, at this year’s auction it went for a price of R1 566 per bottle. At that auction, 10 years ago it went for an average of R225.
I think what we’re seeing is not necessarily a burgeoning of wine culture, although there are signs that that is the case. I think what we’re seeing is a recalibration of wine pricing and the interesting thing about auctions is, an auction is a free market system.
People will pay for the wine what they are prepared to spend, it’s not the wine farms actually setting the prices. They are not saying that this wine is worth R150, R200 or R300 a bottle, it’s the consumer saying: I will buy that wine no matter what it costs or they will have a threshold. That to me is an interesting thing to see, how prices went this year.
I don’t think the international influence is such that foreign exchange is playing a role because you speak to some of the international buyers like Willie Rossouw of Rossouw Wyne in Belgium and he’s been complaining for the last 5-6-7 years that prices are getting out of hand. I don’t think they’re getting out of hand, I think what’s happening is that people are realising just how good South African wines are and are now prepared to pay what the wines are truly worth.
JCW: Well, I hope that all the efforts that I see being made around us in terms of the wine industry actually do bear fruit because I think it’s a fantastic field to be in. I think some of the wines are just absolute nectar to drink, I just get excited about it.
FM: The downside of that Jenny, the one thing I think we all need to get used to is the fact that we’re going to be paying more for good wine.
JCW: Yes, I mean winemakers are saying that across the length and breadth of the country, otherwise they can’t survive.
FM: That’s reality.
JCW: Fiona, wonderful conversation and thank you very much for chatting to us.
FM: It’s an absolute pleasure, any time.
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