South Africa hits ‘tipping point’

After 21 years of South African democracy, representatives from the country’s wine sector and government have presented their vision of the industry’s way ahead.

WOSA chairman Michael Jordaan, flanked by other high profile speakers, addresses delegates at the opening of Cape Wine 2015

Addressing delegates at the start of Cape Wine 2015, Wines of South Africa chairman and venture capitalist Michael Jordaan observed: “We have 350 years of history but in the last 21 years we’ve entered a new era of innovation.”

He outlined early moves to improve plant material, varietal diversity and winemaking techniques during the mid-90s as South Africa reengaged with the international wine industry, before highlighting subsequent developments such as the emergence of new winemaking regions, a young generation of winemakers, a complementary gastronomic scene and even creative ideas such as maturing wine in rooibos wood.

Jordaan also pointed to South Africa’s development of a particularly strong social responsibility ethos, including WIETA’s pioneering Ethical Seal, as he noted that the country produces 75% of the world’s Fairtrade wines.

“I believe we are at a tipping point where all those cumulative innovations will show themselves,” he predicted.

In terms of scale, Jordaan tracked the South African wine industry’s evolution over the last 21 years from just 200 wineries back in 1994 to today’s figure of around 600 wineries. In the same time period annual wine exports have exploded from 22 million litres to 422.7m litres in 2014, and now account for half the country’s total production.

Offering government support for this South African success story was Alan Winde, Western Cape minister for Economic Opportunities, who flagged up the R6 billion (£290m) that the Cape’s wine tourism now generates each year, alongside its wider agricultural sector as the province’s “two key engine rooms”.

“We are really looking at mechanisms to take this industry to a new level,” he told Cape Wine delegates. “We’re going to look specifically at growth markets: there’s a big opportunity in the east – we’re seeing 80-90% year on year growth into China,” Winde reported, flagging up the additional opportunities for wine within the African continent itself.

This picture was endorsed by Hennie Heymans, managing director of logistics firm DHL South Africa, lead sponsor of Cape Wine 2015, who described Africa as “the last bastion of growth left in the world.”

At a time when major drinks firms such as Diageo are stepping up their focus on this part of the world, Heymans highlighted the potential scale of growth here for South Africa in particular as he compared the 17% of African goods currently traded within the continent to the 70% level of intra-trade seen in Europe. “That tells us there’s a massive opportunity,” he remarked.

As part of government efforts to support the future growth of South Africa’s wine industry, Winde pledged to work towards the “removal of red tape”, declaring: “I believe in creating an environment where innovation can take place.” Among the steps implemented so far is a roll out of free WiFi hotspots in rural farming communities, which began last year.

“We need to take that incredible growth we’ve seen over the last 21 years of democracy and double it again,” proposed Winde. “I pledge the commitment of this government to make sure this industry does grow and go from strength to strength.”

Offering a foreign investor’s perspective was Analjit Singh, the Indian entrepreneur who since his first visit to South Africa for the FIFA World Cup in 2010 has bought a number of Franschhoek wineries, as well as taking a stake in Swartland producer Mullineux & Leeu Family Wines.

Singh outlined his own efforts to support the production of high quality South African wines, drawing a comparison with Napa Valley as a mark of how much further the country can raise its ambitions.

“It astounds me that their wines can sell for $1,000 a bottle when we struggle to hit $100,” Singh remarked. “The industry must work together to project its self-found respect, believe we produce the best quality wines and not undersell ourselves.”

the drinks business will be reporting further news from this week’s Cape Wine, with an in-depth look at South Africa’s wine industry due to appear in the magazine’s October issue.