China’s first investment in the South African wine industry

Wednesday, August 7th, 2013

China has overtaken the US as Africa’s top trading partner and – particularly with Africa’s growth forecasts and growing geopolitical importance – it’s making the US nervous.

Days after South Africa’s debut on the cover of Wine Spectator in the USA – where importers have been virtually ignoring Cape Wine – comes the news this week that President Obama is pushing for an early ‘seamless renewal’ of Agoa, the African Growth and Opportunity Act which allows for many African products to be exported to the US free of duties and quotas.

At the same time, Perfect China – a 51% shareholder in Hein Koegelenberg’s Perfect Wine – announced that it had acquired Val de Vie’s cellar, vineyards and 1783 manor house for an undisclosed sum.

The purchase will provide a home for the L’Huguenot brand – a joint venture between Perfect China and Perfect Wine – and the history and tradition so highly prized by Chinese consumers. Val de Vie land was originally granted to French Huguenot Gabriel le Roux in 1688.

Through Perfect China’s direct sales team of more than a million agents and via 5 000 outlets in China, as well as infrastructure in Malaysia, Thailand, Hong Kong, Indonesia, Singapore, Taiwan and Vietnam, the brand is responsible for a quarter of Cape wine exports to China, some 470 000 cases (x 6).

Hein Koegelenberg has been investing in the Asian market for the last eight years. “The Chinese wine market is very important to our industry and this first Chinese investment in the South African winelands is a clear indication of their interest in our wines and can lead the way to a bright future for the export of SA wine to the East,” says Koegelenberg (also CEO of La Motte and Leopard’s Leap Wine Estates).

In what is the first of an annual sales incentive visit, the venture will bring 700 members of the Chinese sales and distribution team to Cape Town in early September. With support from the Tourism Offices of the Western Cape and MEC Alan Winde, the aim is to introduce them to South Africa in efforts to support wine sales and boost tourism.

“This venture also focuses on tourism from China to South Africa. Bringing Chinese customers to South Africa, and letting them experience our wine beauty, will turn them into permanent wine ambassadors,” says Koegelenberg.

Some of Perfect China’s plans include converting the historic manor house into a museum, and enlarging the wine maturation facilities while adding conference and wine tasting facilities.

The remainder of the estate (excluded from the sale) comprises polo fields, functions venue, restaurant and spa, all within a residential estate, and recently won a five-star award at the International Property Awards for Best Development. The existing Val de Vie wine brand remains unaffected.

– Jonathan Snashall